Carlyle, Blackstone, Baring, CRC of China and local cement firms such as JK Lakshmi Cements, Birla Corporation and JSW Cement are in the race to buyout Anil Ambani-owned Reliance Infrastructures’ 5.6 mtpa cement assets, valued about Rs.5,000 crore, a source familiar with the deal said. “The due diligence process is over and the companies are likely to submit binding bids by December 24 to conclude the sale process,” the source said. If the deal goes through, it would be this year’s second biggest in India’s cement sector. The seven companies were selected from 15 potential buyers who submitted a preliminary expression of interest. SBI Caps and Morgan Stanley are the lead bankers advising Reliance Infrastructure on the sale process. A Reliance Infrastructure spokesperson declined to comment citing non-disclosure agreement signed with the prospective buyers.
Reliance Infrastructure holds its cement assets under Reliance Cement Co. Pvt. Ltd, its wholly-owned subsidiary. Reliance Cements has three cement plants with a combined capacity of 5.6 million tonnes in Maharashtra, Madhya Pradesh and Uttar Pradesh. The plant in Madhya Pradesh has commenced commercial production.
In 2014-15 fiscal, Reliance Infrastructure's cement business posted a net loss of Rs. 114 crore on sales of Rs. 541 crore.
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Reliance Cements had won the Sial Ghogri coal mine contract with reserves of 5.69 million tonnes in an auction earlier this year.
In August, Birla Corp. Ltd agreed to acquire two cement assets from the local arm of Lafarge SA with a combined production capacity of around 5.15 million tonnes for a total enterprise value of Rs.5,000 crore. The Lafarge-Birla Corp. deal is yet to be completed as it awaits clarity on the transfer of the limestones mines which are part of the cement assets.
Reliance Infra has taken a conscious decision to exit its non-core business to reduce its debt and to focus on the defence business in a big way. Last month, the company announced the sale of a 49 per cent stake in its Mumbai electricity distribution business to Canadian pension fund PSP Investment Board.
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Reliance Infrastructure has also started a formal process to monetize its roads business, which has received early interest from strategic and portfolio institutional investors in India and overseas.
“The investment of Rs.8,800 crore made by the company in its 100%-owned roads business, comprising 11 revenue-generating projects of approximately 1,000km across 7 states, will be appropriately monetized,” said a company statement after its board meeting last month.
Shares up 2.5 %Shares of Reliance Infrastructure closed up 2.5% at Rs 467 in a weak Mumbai market on Thursday, valuing the company at Rs 12009 crore.