KKR, Birla Group Said to Vie for F1 Builder's Cement Assets

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Practice session during the Indian Formula One Grand Prix at the Buddh International Circuit in Noida, India.

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  • Jaiprakash seeks to cut debt by $2.9 billion via asset sale
  • Bidders could complete due diligence by end of February

KKR & Co. and Indian billionaire Kumar Mangalam Birla’s UltraTech Cement Ltd. have submitted initial bids for all the cement assets of Jaiprakash Associates Ltd., the builder of India’s only Formula One race track, people with knowledge of the matter said.

JSW Cement Ltd., a unit of Indian industrial conglomerate JSW Group, also submitted an offer earlier this month for the cement operations of heavily-indebted Jaiprakash, the people said, asking not to be identified as the information is private. The bidders have started due diligence, which could be completed by the end of February, according to the people.

Potential buyers have been asked to take on as much as 200 billion rupees ($2.9 billion) of the cement business’s debt as part of the deal, the people said. Under the terms being discussed, Jaiprakash wouldn’t receive any cash proceeds from the sale, the people said. 

Jaiprakash is selling assets to help reduce its debt, which more than doubled to 753 billion rupees in the five years through March 2015, according to data compiled by Bloomberg. Any acquisition by UltraTech would help Birla’s conglomerate meet its target of increasing cement capacity to 100 million tons in a decade, a vision the billionaire outlined in November 2014.

Representatives for Jaiprakash, KKR and UltraTech’s parent company, the Aditya Birla Group, declined to comment. “As of now, we are not contemplating any buyout plan” of Jaiprakash cement units, JSW Group said in an e-mailed statement.

UltraTech shares rose 3.1 percent, the biggest intraday jump in more than two months, to 2,698.65 rupees at 10:06 a.m. in Mumbai. The benchmark S&P BSE Sensex gained 0.4 percent.

Jaiprakash has an annual cement production capacity of about 21 million tons, including plants under construction, according to the people. The company aims to pick a winner by the end of March, the people said. 

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