Ispat Eyes Mop-Up Via Nyse Listing
Ispat International, the fast-moving NRI steel group owned by Lakshmi Mittal, is about to raise cash for its high-growth strategies by listing on the New York Stock Exchange (NYSE).
Simultaneously, Ispat is one of the frontrunners to buy a Venezuelen steel plant that is about to be privatised. Eleven bidders are in the running to buy the state-owned Sidor (CVG Siderurgica Del Orinoco) near Venezuela's capital, Caracas.
Ispat International is also looking for buying opportunity in Europe and its teams have just conducted a due diligence study at a wire rod plant in the Ruhr Valley in Germany.
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The plant is being put on the block by German steelmaker Thyssen.
The new burst of activity indicates that Ispat has got over the troubles it faced after taking over the huge Kamet Steelworks in Kazakhstan. Last year, Ispat paid $182 million to acquire 15 coal mines and rail facilities in Kazakhstan.
Steel industry analysts had speculated that Ispat had bitten off more then it could chew in Kazakhstan.
Lakshmi Mittal, the owner and driving force of Ispat International, hit the headlines recently when two surveys listed him as the richest Indian in the United Kingdom. His wealth was estimated at 1.5 billion pounds, making him the eighth richest person in the UK.
Ispat International, with plants around the world, is reckoned to be the world's 12th largest steel producer.
It isn't clear how much cash Ispat aims to raise in the New York market. Some steel industry analysts say the company hasn't decided whether to go in for a full listing on the NYSE or for a private placement.
Analysts say Ispat will be catapulted into a new league if it buys Sidor. The giant plant produces 2.2mt steel annually and any buyer is bound to expand capacity substantially.
Also Ispat would be paying more than it has ever paid for a single acquisition.
Says steel analysts Martin Dobel: "This would be an enormous step for them. They have always bought cheaply. Ispat has been buying and turning round badly-run plants or units that were being privatised.
It now has plants in Kazakhstan, Mexico, the US, Canada, Trinidad & Tobago, Ireland, Germany and Indonesia." Mittal moved to London in 1985 as he needed a new base for his far-flung empire. Ispat International also has a $235 million joint venture in Venezuela with with a local company, Ferrominaria Del Orinoco.
The joint venture aims to set up a greenfield site. In the past, Ispat has bought coastal steel plants for throw-away prices. For instance, it bought a unit from Irish Steel for one Irish punt.
It has then put in financial disciplines to capitalise on its trading skills to sell steel around the world.