Ballarpur Said to Prepare $250 Million IPO of Unit in SingaporeGeorge Smith Alexander and Ruth David
Ballarpur Industries Ltd., the Indian paper maker controlled by Gautam Thapar, plans to raise about $250 million in a Singapore listing of its international operations, said people with knowledge of the matter.
The company is working with Deutsche Bank AG on the deal, said the people, who asked not to be identified because the information is private. The share sale may take place in the second half, they said.
Ballarpur Industries is pursuing an IPO of the business as it seeks to cut debt that swelled to 52.1 billion rupees ($853 million) by the end of December, from 38.8 billion rupees in June 2011, data compiled by Bloomberg show. The company said this month that it’s considering options for fundraising, without providing specifics.
Shares of Ballarpur Industries surged 7.3 percent to 16.10 rupees in Mumbai yesterday, the highest close since June. On its website, the company says it’s India’s largest manufacturer of writing and printing paper.
The company continually reviews its financing requirements and will announce any plans at the appropriate time, Shravani Dang, a spokeswoman for Ballarpur Industries, said in an e-mailed statement. Linus Chettiar, a Mumbai-based spokesman at Deutsche Bank, declined to comment.
The key concern for Ballarpur is the high debt on its balance sheet and interest payments that are about 50 percent of earnings before interest, depreciation, taxes and amortization, said Sumant Kumar, a Mumbai-based analyst at Elara Securities India Pvt. “Any repayment of debt will improve its bottomline,” he said.
In 2011, Ballarpur Industries deferred plans for a $330 million London initial public offering of its unit BILT Paper Plc. BILT said at the time it will wait to seek a higher price, after U.S.-based International Paper Co. agreed to buy Indian rival Andhra Pradesh Paper Mills Ltd. for almost three times its market value.
BILT was looking to use the proceeds of the IPO to reduce $140 million of debt and use $170 million to expand capacity, according to a company statement in March 2011.
Thapar is also seeking buyers for his stake in electrical equipment maker Crompton Greaves Ltd., people familiar with the matter said in March.