Sanjeev Gupta turns to Brookfield for loan
British industrialist Sanjeev Gupta is in talks to borrow hundreds of millions of dollars from Brookfield, after turning to the Canadian asset manager for financing at a time when one of its major lenders is under pressure.
Gupta, which has been dubbed the ‘savior of steel’ in the UK for its unloved metal factory acquisitions, is looking to pledge a stake in one of its most valuable assets for funding, according to people directly familiar with the negotiations.
The proposed loan would sit at a holding company above Gupta’s InfraBuild business in Australia, the people said, warning that talks may not result in a deal. They added that Brookfield, an investment powerhouse with over $ 500 billion in assets, is the only potential lender Gupta has been in talks with.
Talks began when the metals tycoon was looking to secure one of its biggest deals to date, with a bold bid to acquire the steel business of Thyssenkrupp. While the German steelmaker broke off talks Gupta was still looking to borrow money last week, the people said.
InfraBuild, an Australian steel and recycling company, is considered one of the Indian-born industrialist’s most stable assets. The company recorded $ 12 million in profit and $ 218 million in adjusted earnings before interest, taxes, depreciation, and amortization for the fiscal year ending June 2020.
The Financial Times revealed last week that German financial regulator BaFin asked Greensill Bank to reduce exposure to Gupta companies. The German lender is a subsidiary of Greensill Capital, a Company backed by SoftBank who employs former British Prime Minister David Cameron as an adviser.
Over the past five years, Greensill Capital has provided billions of pounds in funding at Gupta GFG Alliance – a loose collection of family businesses that, through a wave of acquisitions, has grown into a sprawling empire, ranging from metals to banking, with $ 20 billion in revenue.
But BaFin is increasingly concerned about Gupta’s level of exposure to Greensill Bank, a nearly century-old lender based in the German city of Bremen. Greensill took over the bank, formerly known as NordFinanz Bank, in 2014.
Gupta has a close relationship with Lex Greensill, the 44-year-old Australian banker who founded the finance company and who previously held a stake in Greensill Capital.
GFG Alliance of Gupta and Brookfield declined to comment.
Gupta has reviewed a stock float for InfraBuild several times over the past few years. The company supplies construction products and operates separately from the Whyalla steel plant, whose purchase for around A $ 700 million ($ 552 million) in 2017 marked its entry into Australia.
InfraBuild had a disastrous beginnings in bond markets in 2019 after potential lenders objected to the opaque nature of GFG. Gupta was forced to inject $ 150 million of his own money as a concession to convince investors, who still charged InfraBuild a 12% interest rate on the $ 325 million bond.
However, debt has since recovered and is now yielding less than 9% on the secondary market.
Additional reports from Kaye Wiggins