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Hindalco Industries is expected to raise $931 million to $1.08 billion by listing its US subsidiary Novelis India on the New York Stock Exchange through the initial public offering.
The global leader in aluminium rolling and recycling, Novelis will offer 4.50 crore shares with a green shoe option to offload another 67.50 lakh shares for 30 days after the date of the final prospectus to cover over subscription.
The price band has been fixed between $18 and $21 per share. Novelis will not receive any proceeds from the sale of shares.
After the completion of the IPO, Hindalco Industries will own 55.50 crore shares or about 92.5 per cent (91.4 per cent in case greenshoe option is triggered) of Novelis.
The equity valuation of Novelis is estimated to be in the range of $10.8-12.6 billion.
Given the net debt of $4.35 billion, the enterprise valuation of the company is estimated to be in the range of $15.2-17 billion.
Morgan Stanley, BofA Securities and Citigroup are acting as lead book-running managers for the proposed offering with Wells Fargo Securities, Deutsche Bank Securities and BMO Capital Markets acting as additional book-running managers.
With the revenue of ₹1.34-lakh crore, Novelis accounted for 60 per cent of Hindalco’s consolidated earnings of ₹2.34-lakh crore in FY24.
The proceeds from the IPO will further strengthen Hindalco’s balance sheet and help to fund the $4.1-billion greenfield rolling and recycling plant being set up at Bay Minette in the US. The company has announced plans to fund the greenfield project through internal accruals. Hindalco has lowest net debt to EBITDA of 1.21 times while that of Novelis was 2.32 times.
Prized catch
In 2007, Hindalco Industries acquired Novelis for $6 billion including its debt of $2.4 billion.
The all-cash deal involved payment of $3.55 billion in cash to Novelis shareholders, at $44.93 a share for delisting the company from the US stock exchange.
On the 17 per cent premium on the then prevailing stock price paid to shareholders, Kumar Mangalam Birla, Chairman of the Aditya Birla Group, then said, “When you are acquiring a world leader, you will have to pay a premium. This is something reasonable.”
The deal, which had reinforced the emergence of Indian companies as a force to reckon with in global dealmaking, came just days after Tata group won the bidding for Anglo-Dutch steelmaker Corus Plc in what was the largest foreign transaction in India Inc history. The Novelis deal was then the second-largest.
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