Aion Capital joins race for LafargeHolcim’s cement assets3 min read . Updated: 09 Mar 2016, 02:46 AM IST
In February, LafargeHolcim announced its plans to sell its entire cement portfolio held under Lafarge India in its bid to comply with anti-trust regulations
Mumbai: Private equity firm Aion Capital Partners has joined the race for LafargeHolcim’s 11 million tonnes of cement assets in India, two people directly involved in the deal said.
“A number of firms are interested in the assets, which includes small cement companies and private equity firms," said one of the two people.
In February, LafargeHolcim announced its plans to sell its entire cement portfolio held under Lafarge India Pvt. Ltd in its bid to comply with anti-trust regulations. The second of the two people cited above said 14-15 firms have evinced interest, Aion being one of them.
Aion Capital is a joint venture between homegrown private equity firm ICICI Ventures and global private equity firm Apollo Global Management.
The two people spoke on condition of anonymity.
A third person, who also declined to be named, added that Aion Capital had even evinced interest when Lafarge was selling 5.15 million tonnes per annum (mtpa) of capacity to comply with the Competition Commission of India (CCI) norms in the wake of the global merger of Holcim Ltd and Lafarge SA to create the largest cement entity in the world.
On 9 February, Mint reported that JSW Cement Ltd, Irish building materials maker CRH Plc and private equity firm Blackstone Group LP were among those interested in the LafargeHolcim assets.
As of now, the discussions for asset purchase are informal, as LafargeHolcim is yet to issue an information memorandum for the deal, the first two people quoted above said.
“The bankers of Lafarge have sent out a teaser which duly provides details of the assets they are selling and is quite comprehensive. They were supposed to send out the information memorandum during the last week of last month which is now expected by the middle of this month," said the second person.
Three other investment bankers who are advising clients on bidding for this asset confirmed the developments.
“Once confidentiality agreements are signed and basic due diligence begins, we are anticipating it will easily take another three-four months before the deal closes," said one of the investment bankers.
A spokesperson for LafargeHolcim declined to comment on the story. An e-mail sent to Aion Capital Partners on Monday evening went unanswered.
This is not the first attempt by LafargeHolcim to sell its cement assets in India. In April 2015, CCI directed the entity to sell its 5.15 million tonne eastern India cement assets. Following the directive, LafargeHolcim entered into an agreement with Birla Corp. Ltd to sell these assets along with the related mining rights in August 2015 for ₹ 5,000 crore.
The deal was called off in February as the current Mines and Minerals Development and Regulation (MMDR) Act does not allow transfer of mining rights of allotted limestone mines by one company to another.
Now LafargeHolcim is looking at a 100% stake sale in Lafarge India without the transfer of mining rights.
LafargeHolcim’s second attempt to dispose of its assets has attracted the old set of bidders who were interested in its eastern India assets and also some new suitors. On 3 March, The Economic Times reported that billionaire businessman Ajay Piramal was also keen on the assets.
“The assets are expected to fetch anywhere between $120-160 million/tonne, which would fetch Lafarge anywhere between $1.3 billion-$1.8 billion. It will be one of the last big transactions in the cement space and as these are good assets, people are seriously considering bidding for the same," said the third person mentioned above. The two people quoted at the start of the story said while the initial rounds of bidding for LafargeHolcim assets may attract a large number of bidders, not many would be able to survive subsequent rounds of bidding for such a large asset.
On 9 February, Mint reported that LafargeHolcim is expecting almost ₹ 10,000 crore for its entire 11 million tonne cement portfolio in India.
“...this (LafargeHolcim) will be one of the largest cement assets to be sold. Going forward, we are expecting smaller company sales than standalone asset sales," said Deepak Ladha, head-India, Global M&A Partners.