Steel tycoon Sanjeev Gupta vows to be more transparent

Billionaire steel tycoon Sanjeev Gupta has conceded he needs to improve transparency over parts of his global empire.

Steel tycoon Sanjeev Gupta. Picture: AAP

Billionaire steel tycoon Sanjeev Gupta has conceded he needs to improve transparency over parts of his global 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.

The industrialist has led an international acquisition spree over the past few years, including the purchase of Arrium’s financially troubled Whyalla steelworks in South Australia while touting $1 billion of investments in solar, wind, battery and pumped-hydro generation to support the now profitable steel business.

A report by The Financial Times over the weekend stated insurer QBE had cut the level of trade credit it provides to Whyalla’s suppliers due to financial transparency concerns, sparking fresh questions over the entrepreneur’s strategy and sources of funding for deals.

However, Mr Gupta denied any cover had been withdrawn by QBE and described the report as “nonsense” and “some stupid crossed wires”.

“When you’re a private company, you think you’re being open and transparent but people speculate and people come up with things,” Mr Gupta said, speaking to The Australian.

QBE had contacted the company with queries and sought a clarification on its consolidated ­financial position.

Mr Gupta said he explained to QBE that each business like Whyalla was a stand-alone investment and not part of a bigger group and said there would be no impact on Whyalla’s suppliers. QBE declined to comment.

“There is no group — these are all individual investments from the family and that’s something that is misunderstood a bit and something we have to clarify. Each asset is funded by the family in equity and then by bankers and funders and so on,” Mr Gupta said, noting the query was settled with QBE during a London briefing.

“I appreciate that these questions are there and we need to think about how these questions don’t arise to begin with because this should be automatic information.”

The situation had underlined the intense interest and unusual structure of businesses where it operates. “It’s not a typical model — typically you have one large corporate globally and you have one balance sheet globally,” Mr Gupta said. “For us, it’s powered by family and invests on an individual basis, but I think the structure will become clearer as we come into the public markets.”

Mr Gupta announced plans last month to float up to 40 per cent of his “green steel” business in Australia in the first half of next year to coincide with peak demand for reinforcing steel amid busy infrastructure programs in Sydney, Brisbane and Melbourne.

“It’s our first debut in the capital markets,” he said. “We have some amazing and fascinating stories but now it’s maybe time for us to share those with the market, which will give us further capital for growth and also provide some transparency that people are crying out for.”

Additional listings are likely to follow, which he expects will improve understanding of the businesses both for his internal staff and external financiers.

“I have zero problems with questions but I am just sometimes frustrated by assumptions,” Mr Gupta said. “But maybe that’s part of the calling: we’re already a $15bn group and by March we’ll be a $25bn group. At this size, there is a necessity for us to look at things. We’re a private company. We’re used to sharing information but still keeping it private but now I think it’s time we become a bit more public and these public listings will help.”

Mr Gupta in January agreed to buy Europe’s biggest aluminium smelter, Dunkerque, from Rio Tinto for $US500 million, adding to other deals, including Tata Steel mills and a coking coal mine bought from Glencore in Australia. He estimates the Whyalla business was on track to generate profits of $700m next year.