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JSW Group has submitted expression of interest to acquire three debt-ridden companies which are under insolvency process as per the National Company Law Tribunal direction.
JSW Steel and JSW Energy plan to tie up with private equity firms Bain Capital and Piramal Group for Bhushan Steel and Bhushan Steel and Power.
It will join hands with AION Capital for buying out stake in Monnet Ispat. AION is an India-focussed fund established by Apollo Global Management Llc and ICICI Venture Funds Management Co with about $825 million in committed capital.
JSW Infrastructure plans joint venture with Jaypee Associates to bid for the stalled ₹2,000 crore real estate project promoted by Jaypee Infratech.
Liquidation proceedings against Jaypee Infratech, a subsidiary of Jaypee Associates, was initiated by the Allahabad bench of NCLT after the company defaulted on ₹526 crore loan extended by IDBI Bank in August.
However, in September, the Supreme Court stayed the NCLT proceedings hearing a public interest litigation filed by Delhi resident Chitra Sharma, who has booked a home in a Jaypee Infratech project. The Apex Court directed the company to deposit ₹2,000 crore to protect the interest of home buyers.
On the funds required for the proposed acquisition, Seshagiri Rao, Joint Managing Director, JSW Steel, said the company has a financial policy to maintain a debt-equity ratio of 1.75 and debt-to-Ebitda level of 3.75 and this will be maintained at all times.
“In case the deal materialises, we will infuse funds to maintain the financial metrics at the stated level,” he added.
The decision of the JSW Group to go in for joint venture to acquire the stressed assets is a marked change in its strategy as it has always acquired asset on its own. In 2010, JSW Steel acquired then stressed Ispat Industries assets for ₹2,100 crore and turned it around into a profitable entity.
In 2014, JSW Steel bought out the sponge iron maker Welspun Maxsteel by taking over its entire debt of ₹1,000 crore. The company may have decided to go in for joint ventures to hedge its risk, given the slowdown in steel demand and regulatory uncertainty looming over the newly framed Insolvency and Bankruptcy Code, said an analyst.
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