hazira: Essar Group to sell infrastructure assets worth over Rs 19,000 crores to ArcelorMittal Nippon Steel

ArcelorMittal Nippon Steel India is to acquire a handful of infrastructure assets belonging to Essar Group for $2.4 billion (Rs 19,158 crore), the companies said in separate statements on Friday.

The assets are primarily for captive use for AM/NS India’s steel operations and were part of the wider Essar Group before Essar Steel India was sold to AM/NS through bankruptcy court in 2019 These include three ports, two central power stations and a power transmission line.

ET first reported on May 12 that the two parties had verbally committed to closing the deal at a valuation of $2 billion to $2.5 billion.

Proceeds from the sale are expected to be used to repay Essar Group debt as well as growth capital in green and existing businesses. Essar said in a press release that the deal concludes its $25 billion (Rs 2 lakh crore) asset monetization program and with it, Indian banks have been “almost fully repaid”. Its aggregate revenue will stand at $15 billion (Rs 1.2 lakh core) and assets under management at $8 billion (Rs 64,000 crore) comprising various assets in India and overseas, the company said. .

“Essar is now repositioned for growth and resurgence,” said Prashant Ruia, a second generation member of the Ruia family who founded Essar Group. “Having consolidated our business over the past four years, we have now entered the next phase of growth focused on building a sustainable energy future that will impact lives and livelihoods for a greener world. .”

The transaction will be fully financed by AM/NS India, the company said in its statement, indicating that there will be no capital injection by its parent companies. AM/NS India is a 60/40 joint venture between major steelmakers ArcelorMittal and Nippon Steel.

ArcelorMittal and Essar Group have also agreed to form a 50-50 joint venture for the construction of a 4 million tonnes per annum LNG terminal in Hazira, Gujarat.

The deal ends a fight between AM/MS India and Essar Group that began following the latter’s failed attempts to save its flagship company from the resolution process. The Ruias offered to pay more than Rs 54,000 crore compared to AM/NS’ winning bid of Rs 42,000 crore. The bankruptcy court, however, ruled in favor of AM/NS as the Ruias’ offer came days after the winning bid was accepted by the lenders.

Port assets include a deep draft captive bulk port at Hazira, Gujarat, adjacent to the AM/NS India steel mill, a port terminal at Vishakhapatnam linked to the iron ore pellet plant of the company with a conveyor and a port in Paradip, Odisha with connection to the company’s pellet plant there.

Power plants include a 270 megawatt multi-fuel unit and another 515 megawatt gas-fired unit at Hazira. The transmission line is a 100 kilometer long connection between the AM/NS steel complex and the central power grid.

Rewan Ruia, director of

& Terminals Limited, said: “With this agreement, which generates a multiple return on investment, Essar Ports & Terminals has unlocked value for all its stakeholders and will continue to focus on building new core infrastructure assets. modern in India and abroad.