JSW Steel To Invest In JSW Paints : Jindal
- ByAyushi Ray | July 27, 2021
JSW Steel to invest in JSW Paints, which is a group company. Managing Director of JSW Paints Parth JIdnal however said that this Rs. 750 crore investment was at an arm’s length and has been decided upon only recently. In an interview on Monday, Jindal said the transaction was vetted by independent valuers, and the price offered is based on the aggregated market valuation. “We were looking to raise funds and had appointed investment bank O3 Capital for the same. We received over 10 term sheets from some of the largest private equity and venture capital funds. However, after we received the non-binding term sheets, we approached JSW Steel and requested them to consider an investment as, personally, I feel it was a bit too early for us to go outside the group for funding,” said Jindal, who heads the JSW group’s unlisted cement and paints businesses.
It was officially confirmed last week by JSW Steel that they will invest an amount in three tranches; ₹300 crore in the first tranche for 7.5% equity shares of the issued and paid-up equity capital of JSW Paints, and 6.88% on a fully diluted basis; followed by ₹250 crore in 2022-23, and ₹200 crore in 2023-24. Broking firm JP Morgan termed the investment decision as shocking, given that both companies are related parties and promoted by the same Jindal family. “All the pricing between JSW Steel and Paints will happen at arm’s length,” Jindal said. JSW Paints, is the newest entrant in India’s ₹54,500 crore formal paints sector, by securing this investment to fuel its expansion plans. An important reason for the steelmaker to fund the paint company was the technology collaboration and innovation that Jindal Paints would bring to JSW Steel, along with the strong ripple effect on the consumer brands of steel, Jindal said. This funding will be used to expand operations in industrial and decorative segments, and become a pan-India player, as confirmed by JSW Paints.
Follow Startup Story
Related Posts
