Hindalco Industries news
Aditya Birla Group’s Hindalco Industries is set to list its US subsidiary, Novelis, on the New York Stock Exchange (NYSE), offering 45 million shares at a price range of $18-21 each. This represents 7.5 percent of Hindalco’s current stake in the company, as per public disclosures made on Tuesday.
The initial public offering (IPO) of Novelis could generate up to $945 million for the company from the offer for sale. At this price range, Novelis is valued at up to $12.6 billion. the company acquired Novelis in 2007 for $6 billion. If the greenshoe option is exercised, the proceeds could increase to $1.08 billion at the upper end of the price band, according to a source close to the development. Based on a net debt of $4.35 billion, the enterprise valuation of Novelis is estimated to be between $15.2 billion and $17 billion, according to the filing with the US Securities and Exchange Commission (SEC).
On Tuesday, Novelis announced the launch of a “roadshow for the IPO of 45 million of its common shares held by its sole shareholder (the company).” This offering will reduce Hindalco’s holding in Novelis to 92.5 percent. The US subsidiary also expects the selling shareholder to grant the underwriters an option to purchase up to an additional 6.7 million common shares to cover over-allotments within 30 days after the final prospectus date. If the underwriters exercise the full over-allotment, Hindalco’s stake in Novelis will further decrease to 91.4 percent, according to the statement.
- In February, Novelis announced plans to pursue a US market listing, with the company as the sole promoter offering the common shares. Currently, Novelis is wholly owned by Hindalco Industries, making Hindalco the sole beneficiary of the up to $945 million proceeds. Hindalco’s management has not yet disclosed the intended use of the expected proceeds. Analysts have noted that the company’s current low-debt balance sheet makes the utilization of the expected IPO proceeds intriguing. As of March, the company’s net debt was Rs 31,536 crore, with a treasury balance of Rs 22,965 crore.
In India, the company plans to invest Rs 6,000 crore as capital expenditure in the current financial year, with FY25’s capex being fully funded through internal accruals. In the US, Novelis is pursuing a $4.1 billion capex for a greenfield rolling and recycling facility in Bay Minette. Novelis’ SEC filing also noted that the company will be a “controlled company” under NYSE rules, allowing it to rely on exemptions from certain corporate governance requirements. Consequently, shareholders will not have the same protections as those in companies subject to such requirements.
Morgan Stanley, BofA Securities, and Citigroup are acting as lead book-running managers for the proposed offering, with Wells Fargo Securities, Deutsche Bank Securities, and BMO Capital Markets serving as additional book-running managers. BNP Paribas, Academy Securities, Credit Agricole CIB, PNC Capital Markets LLC, and SMBC Nikko are co-managers for the offering.
