Indian multinational conglomerate JSW Group has reportedly planned to bid USD 7 billion for ACC Ltd and Ambuja Cements Ltd, the Indian subsidiaries of Holcim AG.
For the bid, the company will provide USD 4.5 billion in self-equity and USD 2.5 billion from unrevealed private equity partners, according to Sajjan Jindal, Group Chairman of JSW. He added that the Group will acquire a 63 percent stake in Ambuja Cements.
The move comes as the Swiss multinational company strives to diversify from its central business of aggregates and cement to focus on developing technology and the growing significance of sustainability.
A month ago, Adani Group, Indian billionaire Gautam Adani's conglomerate, was holding talks to purchase Ambuja from Holcim. To fund the offer, the Adani Group collaborated with many sovereign funds based in the Middle East, which would cost about USD 10 billion. This offer will also consider the USD 6 billion cash offered to Holcim and open accounts for ACC as well as Ambuja.
Holcim, the world’s biggest cement maker, is set to cease operations in India seventeen years after it entered the market. The company will announce the winning bid before May 15th and the complete transaction, along with open offers, will be completed by March 2023.
Credible sources reveal that rising rates worldwide post the hike from the U.S. Fed will have an impact on the offers as private equity funds are offering interest rates as high as 13%.
International finance expert Prabal Banerji remarked that it would be difficult for any bidder to raise funds on their own for such a big acquisition. This is the reason bidders would need assistance from hedge funds and private equities as Indian banks do not fund acquisitions.
In such buyout scenarios, the stakes of ACC and Ambuja will be guaranteed to raise funds.