Tata Steel said on Monday that its step-down subsidiary T S Global Holdings (TSGH) has signed definitive agreements with China’s HBIS Group to divest the entire stake in its southeast Asia business.
“T S Global Holdings Pte. Ltd. (TSGH), an indirect wholly-owned subsidiary of Tata Steel Ltd., has executed definitive agreements with HBIS Group Co. Ltd. (HBIS) controlled entity to divest its entire equity stake in NatSteel Holdings Pte. Ltd. (NSH) and Tata Steel (Thailand) Public Company Ltd. (TSTH),” Tata Steel said in a regulatory filing.
A new company is being formed in which 70% of equity would be held by a HBIS-controlled entity and the balance by TSGH. In 2017-18, NSH accounted for 3.9 % of TSL’s revenue and 1.7% of its net worth, while TSTH had a 3.3% revenue share and a 2.1% share in net worth.
“We have nurtured these assets for over 10 years,” T. V. Narendran, CEO and managing director, Tata Steel said. The sale is likely to get regulatory approvals by May 2019. The deal, signed on Monday in Beijing, would also include Tata Steel’s Vietnam operations (manufacture of reinforcing bars under NSH).
Tata Steel would receive $327 million and 30% equity as sale consideration. “It’s a significant milestone in our strategic relationship, offering SEA business robust growth opportunities, given the access of resources, technical expertise and regional understanding of HBIS,” Mr. Narendran said.
HBIS Group is among the world’s largest steel makers and is into auto steel and home appliances but also supplies to nuclear power and marine engineering sectors.
Domestic operations
Mr. Narendran also said that Tata Steel was keen to stay focused on its domestic operations now. To a query, he said that TSL would get two board-level positions and two senior management positions – deputy CEO and deputy CFO – in the new company. On whether the Tata brand would be reflected in the new entity, he said that it was up to the majority partner to decide on the name.
Executive director and group CFO Koushik Chatterjee said that that the deal would help TSL deleverage. To another query , he said that TSL would stay invested in the new venture for three years (under the pact) or even longer .. “We might get out or hold on to it is too early to comment.
The deal is part of TSL’s strategy to exit non-scale businesses. In an earlier investor presentation, TSL had said it had raised ₹19,400 crore through divestments over the last seven years.
