Hindalco Setting Aside US$3 Billion for Foreign Acquisitions

Indian mining giant Aditya Birla Group is reportedly setting aside at least US$3 billion in funding to be used for acquiring going concerns to add to its subsidiary Hindalco Industries.

According to anonymous sources who spoke to domestic media, Aditya Birla is looking to make a move into the downstream aluminium sector. Such a move would be a marked departure from the position Hindalco has staked out in aluminium’s midstream operations.

“The company has already started scouting for assets in developed markets such as Europe and the US. They could end up spending around $3-5 billion if they find the right assets. They want to add more value-added products to their portfolio as they plan to increase focus on downstream products,” specified one of the sources. He went on to say that this would help boost the firm’s overseas footprint.

Though more details are now available, the move has not come as a surprise to market watchers.

According to sources, Indian billionaire and chairman of Aditya Birla Group Kumar Mangalam Birla is considering pitching an offer for Aleris and Constellium.

Aditya Birla Group already owns Atlanta rolled aluminium producer Novelis through its subsidiary Hindalco Industries. The firm purchased Novelis a decade ago for around US$6 billion.

Hindalco has been making moves to position itself in a better financial stead over the past year. In March a qualified institutional placement (QIP) netted Hindalco US$500 million. The QIP, which was India’s first metal sector share sale using the method, was also the country’s largest non-bank QIP since 2015. Foreign investors including Fidelity, Halbis, Blackrock, Goldman Sachs AMC, East Spring, Jardine Fleming Asset Management (JFAM), and Bajaj Allianz participated in the offering. Several prominent Indian mutual funds bought in to the QIP, including HDFC Mutual Fund, Tata Mutual Fund, SBI Mutual Fund, and Birla Mutual Fund.

Hindalco has also been sending signals via its top management that expansion into neighboring states is in the cards. Only last month did Hindalco’s managing director Satish Pai hint that capacity cuts in the People’s Republic of China may be opening a door for the firm to expand operations in the Middle Kingdom.

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