October 12, 2018 / 12:11 PM / 6 days ago

LMEWEEK-Industrialist Sanjeev Gupta rethinks IPO strategy, targets Australia

* Plans to list steel or energy assets in Australia next year

* Has whittled down banking advisers to just two

* Plans eventual listing in New York or London

By Maytaal Angel

LONDON, Oct 12 (Reuters) - Sanjeev Gupta, founder and chairman of the GFG Alliance, is rethinking his IPO strategy, targeting an initial listing of either his steel or energy assets in Australia next year.

Gupta, whose GFG Alliance spans industrials group Liberty House and energy group SIMEC, has not ruled out a global listing of his steel, energy or aluminium assets in New York or London, but said he is more likely to list in Australia first.

“We would consider listing all divisions (but) on balance, a ‘local’ Australian listing is likely to happen before a ‘global’ New York or London listing,” Gupta said on the sidelines of the annual LME Week industry gathering in London.

He added that whether he lists in Australia, New York or London, units such as steel, energy and aluminium will remain separate, with no plans for one entire group listing.

The British-based industrialist previously planned to list his steel assets in New York this year, but GFG has since expanded rapidly in South Australia, where it owns solar power and battery storage firm SIMEC Zen Energy, as well as the Arrium steelworks in Whyalla.

The Australia expansion means the listing plans were rolled over to next year, though Gupta, who was previously speaking to four banking advisers about the potential listing is now consulting just two.

He declined to name the banks, though Liberty House has previously worked with Australian investment bank Macquarie.

Over the past 3 years, GFG has spent or pledged to spend $2 billion on its Australian assets, $1 billion on its British assets, which include steel and pipe mills formerly owned by Tata Steel, and $500 million on an aluminium smelter in France previously owned by Rio Tinto.

GFG also owns a steel asset in the United States and manufacturing assets in India.

According to Gupta, the GFG Alliance is well capitalised and has low debt levels, but it will need to tap equity markets to fund its multi-billion dollar expansion and investment plans.

Some investors have questioned the extent of Gupta’s funds, his cashflow, and how funding for his deals has been raised. GFG said its accounts show core earnings of $500 million in 2017, versus $165 million a year earlier.

“We don’t have much debt because we haven’t bought or built anything expensive yet. We bought assets for good value and (mostly) without debt. We were able to turn them on their own steam,” said Gupta.

Born in Punjab, India, the businessman first rose to prominence in 2016 when he offered to rescue Tata Steel’s giant steelworks in Port Talbot, Wales, at the height of a worldwide crisis in the sector.

Although the sale did not materialise, Gupta has nevertheless become a major industrial player.

GFG employs some 14,000 people in over 30 countries, making it one of the largest privately-owned industrial enterprises in the world.

Reporting by Maytaal Angel; editing by David Evans

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