Sanjeev Gupta’s GFG restructure ‘shelves’ Infrabuild’s ASX IPO
An ownership shake-up means Sanjeev Gupta has effectively abandoned plans to float his Australian Infrabuild business on the ASX in the near term.
Sanjeev Gupta has effectively abandoned plans to float his Australian Infrabuild business in the near term, with the British industrialist shifting the structure of his most valuable asset to make it easier to sell or take a cash injection from private equity instead.
With steel prices soaring amid booming demand as the Australian economy recovers from the pandemic – and more to come from the flood of infrastructure spending across the country – market sources have tipped Mr Gupta’s Infrabuild assets as worth up to $2bn in a public float.
But last week Mr Gupta filed documents with the corporate regulator to change the structure Liberty Holdings Australia – the parent company of his Infrabuild assets, as well as some US steel assets acquired in 2019 – from a public company to a proprietary limited company.
The shift effectively rules out a public share offer such as a float of the group of the Australian Securities Exchange, as Australian corporations law forbids proprietary limited companies from raising capital from the public where doing so would normally require the issue of a prospectus.
But despite the best conditions for steel makers in decades – BlueScope Steel hit a long term high of $21.99 a share in late April – the move suggests Mr Gupta may be more willing to do a deal with private equity, sell the assets in a trade sale, or simply hang on to the profitable asset, rather float Infrabuild while the steel market is hot.
Liberty Holdings last changed its company structure two years ago, when it was made a public company as Mr Gupta first considered a float of the asset. A spokesman for Mr Gupta’s GFG Alliance said the decision to revert to its former status was in line with the structure of the majority of the rest of his extended group of companies.
“This status can be changed relatively simply if we were to commence any potential IPO process in the future,” he said.
While a proprietary limited company is prevented from offering new shares to the public, it is understood the structure would make it far easier to introduce a major new shareholder – such as a private equity firm – to its register, or to sell all or part of the business in a trade sale.
On May 6 Moody’s downgraded Infrabuild’s corporate debt, citing the potential for contagion from the rest of Mr Gupta’s global empire despite its own strong recent performance.
While Mr Gupta is believed to be resistant to any loss of control of Infrabuild, easily his best performing global asset, private equity firms such as Bain and Brookfield have been linked with potential bids for the company.
Infrabuild’s future under GFG’s ownership ultimately rests on whether the British industrialist can close a $430m refinancing of its Australian Liberty Primary Metals assets, including the Whyalla steelworks in South Australia and the Tahmoor colliery in NSW.
Infrabuild relies on Whyalla for some of its raw materials and, while legally separate, the two parts of Mr Gupta’s Australian business are still closely linked.
But the refinancing will also need to involve repayment of Mr Gupta’s one-time leading financier Greensill Capital, which holds security over shares in Liberty Holdings Australia against repayment of debts owed elsewhere within the GFG group.
Doubts were thrown over that refinancing last week when the UK Serious Fraud Office confirmed it had launched an investigation into GFG over “suspected fraud, fraudulent trading and money laundering” – a probe GFG has said it will “co-operate fully” with.
But financier White Oak has confirmed it is still in talks to offer Liberty Primary Metals a financial lifeline, “subject to financial due diligence and acceptable governance”.
More Coverage
Read related topics:ASX