Hindalco Industries, led by Indian billionaire Kumar Mangalam Birla, is reportedly contemplating a $1.2 billion initial public offering (IPO) for its US-based division, Novelis, as per Bloomberg news.
Novelis stands as the world’s largest producer of flat-rolled aluminum products, utilized in various goods like automobiles and beverage cans.
Bloomberg suggests that Hindalco aims for an $18 billion valuation for Novelis, headquartered in Atlanta, with plans to list it on the New York Stock Exchange by September, subject to approval from the US Securities and Exchange Commission.
Novelis disclosed in February that it had submitted a confidential application to the SEC for the listing, according to Bloomberg.
While discussions are ongoing, specifics of the fundraising, including its scale, may change. Hindalco might opt not to proceed with an IPO, as per the report.
Reportedly, a Hindalco official declined to comment. Hindalco acquired Novelis in a multibillion-dollar deal in 2007. The US division contributed nearly 60% of the Indian firm’s revenue in the previous fiscal year. Under the proposed sale, a Hindalco unit will offer the shares, and Novelis will not receive any proceeds.
Bank of America Corp. and Citigroup Inc. are among the banks involved in the Novelis IPO, Bloomberg reported.
In its March quarter results announced on May 6, Novelis reported a 6% increase in earnings to $166 million compared to the same period last year. However, full-year earnings saw a 9% decline.
Due to a decrease in the average price of aluminum, the company’s revenue fell by 7% to $4.1 billion. Nevertheless, increased shipments partially offset the pricing decline. Total exports of flat-rolled products grew by 2% to 951 kilo tons in the March quarter, driven by rising demand for beverage packaging sheets.
