Tata Motors is looking to raise about one billion euros (nearly Rs 10,000 crore) through equity in the next 12-18 months as part of its plans to term out the 3.8 billion euros bridge financing facility for acquiring Italian commercial automaker Iveco Group, which will catapult it to the fourth largest big truck maker globally.
India’s leading automaker announced on Wednesday that it would acquire Iveco Group, excluding its defence business, for euro 3.8 billion (nearly Rs 38,240 crore) in a deal which is set to be its single-biggest buyout.
Addressing a conference call, Tata Motors Group CFO PB Balaji said, ‘The funding of 3.8 billion euros has already been secured through bridge financing facility committed by Morgan Stanley & MUFG and this is expected to be syndicated, subsequently termed out by a combination of equity and long-term debt over next 12 to 18 months after the closure of the transaction.’
He further said, ‘We expect this transaction to close sometime by April next year, assuming all the regulatory approvals come through.’ When asked how much fund Tata Motors is looking to raise through equity, Balaji said, ‘We have not yet made up our mind in terms of the magnitude of the equity raise. It obviously has to be discussed with the rating agencies as well, but we believe close to about ‘a billion euros kind of a raise’ is what the ballpark range will come on, to how much exactly it will be.’
Asserting that the company is ‘comfortable with respect to the metrics that we will land with that kind of a fundraise’, he said, adding, ‘Also, other thing is that of the monetisation of Tata Capital stake that also needs to be factored in and together that more or less takes care of it (terming out of the bridge financing).’
On the significance of the acquisition, Balaji said, ‘Strategically, this ranks right up there in terms of the top acquisition that the (Tata) group has done.’ From a commercial vehicle business perspective, it is very strategic and something that is ‘a very, very large move’ from an industry perspective, as it is a very consolidated industry, he noted.
‘With this…we move into the number four in terms of ‘greater than six tonne’ trucks portfolio, and within touching distance of the two and the three and the fourth that are already there,’ Balaji said.
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