JSW Steel to raise $1 bn via dollar bonds for Bhushan acquisition, capex

Source says talks with firm are currently focused on structure of offering and seeking necessary approvals from RBI. Issue will be launched as early as this month

JSW Steel is planning to raise $1 billion to fund its acquisition of Bhushan Power and Steel and refinance old loans. 

A banking source said talks with the company are currently focused on the structure of the offering and seeking necessary approvals from the Reserve Bank of India (RBI). "The issue will be launched as early as this month," said a banker. 

Backed by rising steel prices and higher output, JSW Steel reported Rs 19,329 crore of revenue and profits of Rs 2,829 crore in December quarter. Its stock was trading at Rs 410.50 a share at around 1415 hours on the Bombay Stock Exchange, giving it a total market valuation of about Rs 99,500 crore.

Bankers said the company is awaiting the Supreme Court’s order on its Bhushan Power and Steel acquisition and will use the proceeds of the dollar bonds for the acquisition. JSW is acquiring Bhushan Power for Rs 19,700 crore after BPSL was sent for debt resolution under the Insolvency and Bankruptcy code (IBC).

Bankers said several other companies are looking at the dollar bond route to raise funds before the fiscal year ends next month. "There is enough liquidity in the global markets and investors are looking for paper from good companies," said a banker.

JSW, like rest of the industry, is witnessing a strong growth in the automotive sector, led by passenger vehicles and two-wheelers, and tractors. The recovery in residential real estate and continued traction in commercial real estate is also helping the sector.

Company officials said they will be commissioning several projects in the current financial year.

"The expansion project at Dolvi from 5 million tonnes per annum (mtpa) to 10 mtpa steelmaking capacity is nearing completion, with majority of operations to be commissioned in the current quarter. Full integrated operations and stabilization will take place in first quarter of fiscal 2021-2022," the company said.