Hindalco subsidiary Novelis files papers with SEC for IPO

Aditya Birla Group company Novelis Inc has filed papers with the US market regulator Securities and Exchange Commission relating to the proposed initial public offering of its common shares.

Novelis, the leading aluminium solutions provider and the world leader in aluminium rolling and recycling, is the wholly-owned subsidiary of Hindalco Industries.

The proposed IPO of Novelis is completely offer for sale by the existing promoter Hindalco Industries.

On Tuesday, Novelis said it has confidentially submitted a draft registration statement on Form F-1 with the SEC relating to the proposed IPO.

The common shares are expected to be offered by Novelis’ sole shareholder Hindalco Industries. Novelis will not receive any proceeds from the sale of common shares. It expects to complete the public offering after the SEC completes its review process, subject to market and other conditions, it said.

Novelis was listed on New York Stock Exchange and the Toronto Stock Exchange before it was acquired by Hindalco Industries in 2007.

Birla’s acquisition

Hindalco entered into an agreement to acquire the company in an all-cash transaction which then valued Novelis at about $6 billion. Under the terms of the agreement, Novelis then shareholders had receive $44.93 in cash for each outstanding common share.

As per Canadian law, Hindalco, through its wholly-owned subsidiary AV Metals Inc, acquired 75,415,536 common shares of Novelis, representing 100 per cent of the outstanding common shares. Immediately after closing, AV Metals Inc transferred the common shares of Novelis to its wholly-owned subsidiary AV Aluminum Inc.

Novelis has come a long way ever since it was acquired by the Birla Group. The company has recently announced its first greenfield recycling and rolling aluminium project in 40 years at Bay Minette, Alabama with an investment of $4.1 billion. It plans to fund the entire project through internal accruals and stop-gap bridge loan arrangement.

Novelis has an annual revenue of $18.5 billion and EBITDA of $1.8 billion. The company, which caters to automotive, aerospace, beverage cans and speciality segments, registered annual sales of 37.90 lakh tonnes through its 19 manufacturing plants in nine countries and employs 13,170 people.

In March quarter, the management expects margin of about $525 a tonne, considering normalised volumes and recovery of demand in the key beverage can segment.