Lafarge in talks with HDFC to raise Rs 620 crore

Fri, May 16 12:45 AM

Lafarge, the world's second largest cement-maker, is in talks with Indian financial institutions, including Housing Development Finance Corporation (HDFC), to raise over Rs 620 crore to part finance its acquisition of Larsen and amp; Toubro's ready-mix concrete business--L and amp;T Concrete. Lafarge announced on Thursday that it acquired 100 per cent equity in L and amp;T Concrete to fuel its growth plans in India for a total consideration of Rs 1,480 crore.

"We are in talks with a couple of financial institutions, including HDFC, to fund the acquisition. This would be finalised in a couple of weeks and the entire deal would be closed in a couple of months," said a senior cement industry executive close to Lafarge.

ICICI Bank and the State Bank of India are the two other banking institutions that are interested in funding the buyout. According to sources, the treasury team of Lafarge and its advisors, JM Financial, are entrusted with the task of raising funds for the acquisition.

Lafarge Regional President (Asia and amp; Middle East) Bradley Mulroney said the debt would be raised from India itself. "We will bring in excess of 50 per cent as equity from Lafarge and the remaining would be raised from India.

I cannot comment on institutions that we are in talks with. But the remaining debt would certainly be raised from India itself," he said.

Currently, Lafarge has three cement plants in the country and has a presence in the Indian market for over nine years. The acquisition would help them to have a direct access to L and amp;T's 66 plants with a market share of 25 per cent in India's construction segment.

Leading cement makers, including Grasim, Holcim and Heidelberg, were also in the race to buy L and amp;T's RMC business. An L and amp;T director told HT that the decision to sell the RMC business was in line with the company's plans to focus more on engineering and construction.

" We have got an order book of over 50,000 crore. Now we are more focussed on segments that we expect will be a stronger growth option," he said.

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