Hindalco Said to Consider $500 Million Share Sale Amid RallyBy
India’s biggest aluminum maker seeks to reduce debt levels
Company shelved institutional stock offering in 2014
Hindalco Industries Ltd. is considering raising about $500 million through a stock sale, as India’s biggest aluminum maker seeks to cut debt amid a share-price rally this year, according to people with knowledge of the matter.
Hindalco is weighing a rights offering or an institutional share sale, the people said, asking not to be identified because the details are private. The Mumbai-based company’s board will meet Nov. 12 to discuss a possible fundraising, which could be through methods including a stock offering or convertible bond sale, it said in an exchange filing Wednesday.
Any deal would follow a rally in Hindalco’s share price that has nearly doubled the company’s market value this year to $5.2 billion at the Monday close. The metals flagship of the Aditya Birla Group is “relentlessly focused” on cutting debt in the short term, Hindalco Managing Director Satish Pai said on an August earnings call with analysts.
“If the company goes ahead with the equity raising, it will be used for deleveraging,” Goutam Chakraborty, a Mumbai-based analyst at Emkay Global Financial Services Ltd., said by phone Tuesday. “There has been a turnaround in all metal prices except copper prices in the past few months. The sentiments in the aluminum and metal markets have improved.”
The stock sale would require shareholder approval, the people said. The ultimate size and structure of the transaction will depend on its impact on the founders’ stake in Hindalco, which was 38 percent at the end of September, one of the people said.
A representative for Hindalco declined to comment.
Hindalco is the second-best performer this year on the S&P BSE Metal Index, which has risen 35 percent in 2016. The benchmark S&P BSE Sensex has gained 1.9 percent over the period.
The producer of copper and aluminum shelved an institutional share sale of as much as 50 billion rupees ($750 million) in 2014 because of uncertainty about its access to cheap raw materials, people with knowledge of the matter said at the time.