Metals Trader Liberty House Targets Middle East in Building BoomBy
Acquisitions may involve aluminum, steel, cement factories
IPO of a subsidiary planned ‘very soon’; debt also an option
Liberty House Group, the London-based metals trader that has expanded in the U.K. , Australia and the U.S. over the past four years, is looking to acquire factories in the Middle East, building on the commodities business it started in Dubai 10 years ago, according to Executive Chairman Sanjeev Gupta.
The deals could involve buying manufacturers of building materials, cement, steel or aluminum, and would mark the company’s first acquisition in the region, Gupta said in an interview in Dubai this month as Liberty House celebrated 25 years in business. The company is also preparing for an initial public offering of a subsidiary “very soon” and is trying to buy two steel plants and an automotive components factory in India, he said.
“We have a strong presence here,” Gupta said. “A couple of projects are being examined.”
The Middle East will be among the hottest markets for steel next year, with demand set to rise 4.8 percent compared with 1.5 percent this year, according to an October forecast by the World Steel Association, a trade group. Dubai Expo 2020 has awarded $2.9 billion of construction contracts this year for the international trade fair, including the central Al Wasl Plaza that will include 13.6 kilometers (8.4 miles) of steel work. Qatar is building at least eight new stadiums to host the soccer World Cup in 2022.
“It’s a fast-growing market,” Gupta said. “As the group moves toward being more and more industrial, we would very much like to have an industrial presence in this region as well.” The Dubai office has about 80 employees, including workers supplying piping for electrical uses.
Any Gulf takeover won’t exceed the size of deals that Liberty House has made since buying its first industrial asset in 2013 -- in Wales, U.K., Gupta said. This year, Liberty House made about 1 billion pounds ($1.3 billion) in acquisitions and will earn a profit of about $100 million, he said.
Liberty House is preparing to issue debt and hold an IPO to fund further expansion, Gupta said. “Sooner or later we’re going to have raise capital, whether it’s a bond, whether it’s equity, we have to prepare ourselves. If there is a big thing to do, then we can do it through that process.”
GFG Alliance, the holding company overseeing Liberty House, this year took ownership of the former Arrium Ltd. assets in Australia, including iron ore mines to blast furnace operations with capacity to produce 1.2 million metric tons of steel a year. The group agreed in April to buy a shuttered steel plant in Georgetown, South Carolina, from ArcelorMittal, and days later announced that GFG Alliance was leading a $250 million bid to buy Mesabi Metallics Co.’s iron ore assets in Minnesota out of bankruptcy.
“It’s safe to say that we will be investing in the order of hundreds of millions (of dollars) in the U.S.,” Gupta said. “This year was about Australia, next year will be about the U.S.”