Novelis shelves IPO plan amid adverse market conditions

US-based aluminium producer Novelis Inc., a subsidiary of Hindalco Industries Ltd, has shelved plans to raise $945 million in an initial public offering (IPO).

Novelis, which also launched an investor  roadshow for the IPO in the US, had last week said that it would sell 45 million shares for $18-21 each.

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.

The sale is being halted due to adverse market conditions, the company said in a statement, adding that it will evaluate the timing of the offering.

Shares of Hindalco swung wildly on Wednesday, initially plunging as much as 6.5% in early trading on BSE before surging by 6.82% from Tuesday’s close to end at ₹690.95.

The shares had plunged 6.7% on Tuesday amid a broader market selloff after the general election results showed the ruling Bharatiya Janata Party falling short of the majority mark for the first time in three elections.

The offering was being led by Morgan Stanley, Bank of America Corp., Citigroup Inc., Wells Fargo & Co., Deutsche Bank AG and the Bank of Montreal.

Novelis had 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.