Tata Steel Ltd agreed to sell stakes in its Southeast Asian businesses to China’s HBIS Group Co, as the Indian company streamlines operations to focus on domestic market. Tata will divest its entire equity in Singapore’s NatSteel Holdings Pte and Tata Steel Thailand Pcl to a company in which 70% of the shares will be held by China’s No 2 steelmaker and parent of Hesteel Co, the Mumbai-based firm said in a statement. Tata will get a 30% stake and $327mn from the sale, which is expected to be completed in three to four months, subject to regulatory approvals, it said.
The deal offers “the SEA business robust growth opportunities, given the access to resources, technical expertise and regional understanding of HBIS,” Tata’s managing director TV Narendran said in the statement.NatSteel has annual production capacity of over 2mn tonnes, while the Thai business has finished goods capacity of about 1.7mn tonnes, according to the companies’ websites. ata Steel is India’s oldest mill with capacity of more than 28mn tonnes. Tata Steel plans to retain its 30% stake in the company for at least 3 years after which it will look at opportunities to sell it through initial public offering or other options, Koushik Chatterjee, chief financial officer of the company, said in a conference call after the deal announcement.
Tata is talking to HBIS for larger co-operation in many other areas and this deal is a good starting point, Chatterjee said. The company is turning its focus to the growing Indian market, where it plans to double capacity within five years. It has snapped up indebted domestic mills and is in the process of merging its European operations with Thyssenkrupp AG. The strategic shift helped lift the mill to its best quarterly profit in nine years in the three months through September. BNP Paribas was the sole adviser on the transaction, according to a spokeswoman for the bank. “The home market is the fastest growing market where we have a footprint and is also the most profitable market for Tata Steel,” Narendran said.
Sources and photo-credits: Bloomberg, Gulf Times