Liberty lines up banks, private funds for Tata Steel UK bid

22 June 2016

Liberty House Group has lined up financing from banks in the United Kingdom and India as well as several private investment firms to support its bid to acquire the British assets of Tata Steel (TISC.NS), Executive Chairman Sanjeev Gupta told Reuters.

The firm is one of a number of companies that have put forward offers to buy Tata Steel's loss-making UK operations and save thousands of jobs in Britain, whose steel industry has been hit by cheap Chinese imports, high energy costs and a global supply glut.

The sale process is "ongoing" and no announcements have yet been made on any shortlisted bidders, Gupta told Reuters at the firm's office in Dubai.

Referring to how it plans to finance its bid, Gupta said it had lined up three UK high street lenders, large Indian banks and several funds and equity investors, some of which it had shortlisted as backers.

"I'm not, for a second, concerned about funding," he said.

A successful bid for Tata Steel's operations could also make investments in steel businesses in continental Europe much more attractive for Liberty, according to Gupta.

There is some value to be created by integrating some British and European operations, which would be more compelling if we had a deal for Tata, but without this any investments in Europe would likely be restricted to the engineering sector.

Should its bid for Tata Steel's British operations fail, Liberty is eyeing investments in steel plants in the United States, India and Africa, Gupta told Reuters earlier this month.

Liberty views the United States as a better investment opportunity than Europe, given the American government's strong support for the steel industry, while its model for recycling scrap steel into new metal is more advanced than elsewhere in the world.

This 'green steel' model is one which Liberty is looking to promote in Britain, where the amount of re-purposable steel is set to double in the coming years to 20 million tonnes per annum, according to Gupta.

"Irrespective of what happens with Tata, we will set up our furnaces across the country at various concentration points," he said of plans to use electric arc furnaces to produce recycled steel.

"We are studying the Midlands and we'll definitely set up a steel plant in the Midlands at some point, because it's a high generation area for scrap and is a high consumption area for steel."


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