French cement giant Lafarge seeks to sell minority stake in Indian unit for $300 mn: report
20 Dec 2012
French cement giant Lafarge SA is in talks with private equity and financial firms to sell a 20-25 per cent stake in its Indian unit for about $300 million, Reuters today reported, citing two sources with direct knowledge of the matter.
The Paris-based company has contacted several firms, including private US-based private equity firm Kohlberg Kravis Roberts and Co and Singapore's sovereign wealth fund Temasek Holdings, with a potential deal valuing its Indian operations at around $1.2 billion.
Lafarge, the world's largest cement maker, which recently has been selling some of its non-core assets, may also the entire unit if it gets a strategic buyer, said the report.
Lafarge, which has four cement plants in India, started entered the Indian market in 1999 by acquiring Tata Steel's cement business.
Lafarge is seeking to reduce its €14.3 billion debt, and has recently divested some of its gypsum assets and cement and ready-mix plants to help meet its target of reducing debt by about €2 billion by the end of this year.
Most of its debt was incurred through its 2007 acquisition of the cement unit of Orascom Construction Industries of Egypt for €8.8 billion ($12.9 billion).
In December last year, Aditya Birla Group was touted to be the potential buyer of Lafarge's, cement business in South Africa, in a deal that could fetch around $700 million to $800 million. In November, it sold a number of its cement and aggregates plants in the UK to steel tycoon Lakshmi Mittal.
Lafarge is currently focusing on increasing sales, cash generation and return on capital, rather than the expansion it had earlier been going after. It has now shifted its focus to developing countries, with Africa and Middle East being its main target, which brings in 22.5 per cent of its revenues.