Novelis eyes up to $945 million from US IPO

Novelis Inc., the US subsidiary of the Aditya Birla group’s flagship metals firm, Hindalco Industries Ltd, is looking to raise up to $945 million in its initial public offering (IPO) in the US.

The aluminium producer, which launched a roadshow for the IPO in the US, plans to sell 45 million shares at between $18-21 apiece, a Hindalco exchange filing showed on Tuesday.

Following the share sale, a Hindalco subsidiary will own 555 million Novelis shares, or about 92.5% of the total, the filing said.

Morgan Stanley, BofA Securities and Citigroup will be lead book-running managers for the proposed offering, with Wells Fargo Securities, Deutsche Bank Securities and BMO Capital Markets acting as additional book-running managers.

BNP PARIBAS, Academy Securities, Credit Agricole CIB, PNC Capital Markets LLC and SMBC Nikko are co-managers for the proposed offering.

CNBCTV18 had reported in February that Hindalco plans to raise $1 billion from the IPO and expects a valuation of $15 billion for the Georgia, Atlanta-based maker of aluminium products.

Based on the outstanding shares listed in its filing with the US capital markets regulator, Novelis would have a market value of about $12.6 billion, Bloomberg said.

Novelis reported a strong fourth quarter performance with earnings before interest, taxes, depreciation and amortization per tonne at $540, which was up 25% year-on-year, driven primarily by lower operating costs, favourable metal gains and market recovery.

During the fourth quarter, the company reported a revenue of $4.1 billion, down 7% y-o-y, impacted by lower average aluminium prices.

However, net income from continuing operations, excluding special items, during the latest quarter was $179 million, up 2% y-o-y, and up 3% quarter-on-quarter.

Novelis was founded in 2005 after being spun off from Alcan Inc., and was acquired by Hindalco in 2007, marking one of the largest overseas acquisitions by an Indian company.