JSW Steel plans to raise up to $2 bn from foreign investors

Sajjan Jindal-led JSW Steel will approach shareholders to raise up to $2 billion from global capital markets to meet its long-term capex requirement and loan refinancing, among others.

The steelmaker will place the enabling resolution before its shareholders next month, the company said in a regulatory filing. It is in the interest of the company to raise long-term resources with convertible option so as to optimise capital structure for future growth, it said.

“The proceeds of the issue will be used for long-term funding to meet the planned capital expenditure and for other corporate purposes, including refinancing of expensive debt to reduce interest costs and to meet any unlikely shortfall in unforeseen circumstances,” it added.

The firm said it intends to raise additional long-term funding through issuance of non-convertible foreign currency denominated bonds not exceeding $2 billion in aggregate in the international capital market.

The firm can also opt for issue of shares and/or fully convertible debentures/partly convertible debentures/optionally convertible debentures/non-convertible debentures along with warrants and/or convertible securities other than warrants convertible into equity shares.

These will be issued to eligible qualified institutional buyers, in one or more tranches, through a qualified institutions placement not exceeding a sum of Rs 4,000 crore, it added.

Explaining the rationale behind the fund raising, JSW Steel said the Indian economy is poised for robust growth backed by strong macroeconomic factors and government’s pro-growth policies.

“The company has just completed its present brownfield expansion to reach 18 million tonne per annum (MTPA) capacity. It has a strategic vision to reach 40 MTPA capacity by 2025 with significant investment in mineral resources i.e. iron ore and coal,” it added.