Essar Signs $2.4-Billion Deal To Sell Ports Business To Arcelor Mittal Nippon Steel

The deal also envisages a 50-50 Joint Venture partnership, for building a 4 MTPA LNG terminal at Hazira, Gujarat, between Essar and ArcelorMittal

Essar group on Friday announced the signing of a $2.4 billion (Rs 19,000 crore) deal to sell certain ports and power infrastructure to ArcelorMittal Nippon Steel (AM/NS)  in one of the largest post-pandemic merger and acquisition deals in India.

According to a statement by Essar, the company signed definitive agreements with AM/NS for certain ports and power assets which are primarily captive to Hazira steel plant operations. The deal also envisages a 50-50 Joint Venture partnership, for building a 4 MTPA LNG terminal at Hazira, Gujarat, between Essar and ArcelorMittal.

Rewant Ruia, director, Essar Ports & Terminals Limited, said “With this deal, which yields a multifold return on our investments, Essar Ports & Terminals has unlocked value for all its stakeholders and will continue to focus on building new and modern core infrastructure assets in India and overseas.”

Prashant Ruia, director, Essar Capital, said “Essar is now repositioned for growth and resurgence. After consolidating our businesses over the last 4 years, we have now entered the next growth phase focused on helping build a sustainable energy future that will impact lives and livelihoods for a greener world.”

On the other hand, AM/NS India in a statement said the deal covers port assets in Gujarat, Andhra Pradesh and Odisha as well as two power plants at Hazira and an electricity transmission line.

AM/NS India had acquired Essar Steel for around Rs 42,000 crore in bankruptcy proceedings in 2018-19 and had claimed the acquisition had given it the right to the licence of port operations. But Essar Bulk Terminal, part of the Essar group, opposed it saying the Hazira port was not a part of the bankruptcy process.

The matter went to the courts where it was being argued. The two have now reached an agreement over it.

With this deal, Essar will conclude its planned asset monetisation programme and complete the debt repayment plan of $25 billion (Rs 2,00,000 crore) with the Indian banking sector being almost fully repaid. Essar’s aggregate revenues will stand at $15 billion (Rs 1.2 lakh core) and an AUM (Assets Under Management) of $ 8 billion (Rs 64,000 crore) comprising of various assets spread across India and overseas.

These assets under Energy sector include a 10 MTPA refinery in the United Kingdom (UK), 15 TCF reserves (including some producing fields) of Unconventional Hydrocarbons in India & Vietnam and a 1,200 MW Power Plant in India; Infra sector assets include a storage terminal in UK of 3 million m3 capacity and a 20 MTPA Port in India; Metals & Mining sector assets include a major iron ore mine and pellet project in USA; Technology & Services sector assets include Global EPC business and IT solutions provider with centres across 30+ countries.

By monetising assets in a planned and strategic manner, that were built with earlier technologies over the last several years, Essar is now poised to reinvest in new assets with the latest, more efficient and ESG-compliant technologies to last the next several decades.

Essar has also planned significant investments in its core sectors of energy, infrastructure, metals & mining, and technology & services. While the ongoing businesses will provide operational stability, our renewed focus will be to transition existing assets to green and invest in sector-transforming clean businesses around the investment themes of decarbonisation and digitisation.