Sanjeev Gupta flags plans to float his US steel business in 2019 after snapping up metal producer
Sanjeev Gupta plans to float his US steel business in the wake of GFG Alliance snapping up a Texas-based metal producer.
Billionaire Sanjeev Gupta plans to float his US steel business in the second half of 2019 after the industrialist’s GFG Alliance paid $US320 million ($434m) to buy a Texas-based metal producer as part of a rapid global expansion.
GFG will acquire Keystone Consolidated Industries from Contran Corporation and merge the business with its existing Georgetown steel plant in South Carolina as it targets 5 million tonnes of scrap steel capacity by 2020.
The entrepreneur is targeting floating part of his ‘green steel’ scrap recycling business in Australia in the first half of 2019, closely followed by a separate US listing incorporating its North American steel assets.
“The plan is to do Australia first and then look to do the US listing straight after,” Mr Gupta told The Australian. The Keystone deal “is a solid step toward our destination of growing in the US.”
The revelation of an additional listing follows Mr Gupta conceding in The Australian today he needs to improve transparency over parts of his international empire as underwriters seek an explanation over the structure of his sprawling businesses, including a string of investments in Australia.
Mr Gupta, the son of an Indian commodities trader, has used his Liberty House group for a rapid global expansion of steel production and renewable energy developments known as the GFG Alliance.
A year ago, he bought the mothballed Georgetown steel plant in the US and restarted operations in June.
In January, GFG agreed to buy Europe’s biggest aluminium smelter, Dunkerque, from Rio Tinto for $US500m, adding to other deals, including Tata Steel mills.
In Australia Mr Gupta shot to prominence after rescuing Arrium’s financially troubled Whyalla steelworks in South Australia along with the purchase of a NSW coking coal mine from Glencore and the promise of $1 billion of investments in solar, wind, battery and pumped-hydro generation to support the now profitable steel business.
The acquisition of Keystone will hand GFG a wire rod facility with a 1.1 million tonne electric arc furnace in Illinois, agricultural fence products, industrial wire and metal reinforcement facilities.
The Keystone deal will be financed by an asset backed loan facility from two unnamed North American banks and a term loan from BlackRock. GFG will also contribute equity and merge the Georgetown wire rod plant it acquired a year ago from ArcelorMittal as part of the transaction.
“It’s the same as the east coast business in Australia where we collect scrap, process it and recycle it,” Mr Gupta said. “In the US when we started there about a year ago, I announced our intention to target a 5m tonne plant. This is now obviously our big step toward that target.”
GFG’s Liberty Steel USA unit will look to grow further with more deals in the coming months, according to a statement.
“GFG plans a diverse mix of assets for the U.S. business, ranging from the revitalisation of steel plants that had previously been taken offline, such as Georgetown, to those which are operating and performing very well like Keystone,” GFG said in a statement. “While the current portfolio is focused on value added long steel products, the company is actively pursuing additional acquisitions in flat products and further downstream capabilities to drive towards 5mtpa of capacity by 2020.”
In Australia, Mr Gupta has previously outlined plan to expand production beyond 1.5m tonnes a year from the green steel business — which has plants in Melbourne Sydney and Newcastle — and was considering a fourth plant in Brisbane.
The expansion and float is timed to coincide with peak demand for reinforcing steel amid busy infrastructure programs in the three east coast capital cities.
The electric arc furnaces were acquired when Mr Gupta bought the Arrium business out of receivership last year for $700m.
They are the only producers of reinforcing steel in the country and would produce earnings of $450m to $500m.
More Coverage
Employers struggle to find skilled staff and graduates
Despite record immigration and a softening labour market, most businesses can’t find workers with the right skills, forcing a shift towards new hiring strategies.
Coal workers stood down as mining group’s debts mount
Over 400 workers at Tahmoor Coal in NSW have been stood down and production curtailed, as rumours swirl that Sanjeev Gupta’s debt worries have spread.