Billionaire Sajjan Jindal’s JSW Steel will sell a 50 percent stake in its subsidiary Bhushan Power and Steel (BPSL) to Japan’s JFE Steel Corporation for Rs 15,750 crore to form an equal joint venture (JV) at an equity value of Rs 31,500 crore.
As part of the JV, JSW Steel will transfer its wholly-owned BPSL business through a slump sale on a going-concern basis to JSW Sambalpur Steel for a cash consideration of Rs 24,483 crore.
JSW Sambalpur is 100 percent held by JSW Kalinga Steel. As of date, JSW Kalinga is a wholly owned subsidiary of Piombino Steel Limited, which in turn is owned 82.65 percent by JSW Steel and 17.35 percent by JSW Shipping & Logistics Private Limited, a promoter group entity.
JFE will invest/acquire 50 percent equity stake in JSW Kalinga at an aggregate consideration of Rs 15,750 crores in two equal tranches. The slump sale, expected to be completed in 6-9 months, and related steps will result in JSW Kalinga being held jointly (50:50) by JSW Steel and JFE.
JSW Steel had acquired BPSL in 2021 through the Insolvency and Bankruptcy Code (IBC) process and transformed it from a 2.75 million tonnes per annum (MTPA) distressed unit into a profitable company with an expanded capacity of 4.5 MTP, currently employing 25,000 people.
Through this transaction, JSW will monetise part of its stake in BPSL to accelerate its overall growth strategy. The company believes that the cash proceeds it receives from the transaction will strengthen its balance sheet and provide a clear runway for growth that will create significant value for its stakeholders.
“JFE has been a trusted partner for JSW Steel since 2009, and the relationship has strengthened over the years as both companies have collaborated on numerous initiatives... India is the fastest-growing major economy as well as steel market in the world, and this transaction enables JSW to accelerate its growth in a financially prudent manner, and create further value for its stakeholders,” said Jayant Acharya, Joint Managing Director and CEO of JSW Steel.
JSW has set a target of achieving a steel‐making capacity of 50mtpa in India by FY 2031. At present, the company’s consolidated crude steel capacity stands at 35.7 MTPA including 1.5 MTPA in the US.
Masayuki Hirose, President and CEO of JFE Steel Corporation said, “Our relationship is now entering a new phase. I am confident that by leveraging our technological strengths and jointly operating an integrated steel plant in India with JSW, we will not only contribute to the further growth of both companies but also make a significant contribution to the development of the Indian steel industry.”