TS Global Holdings Pte, a wholly-owned subsidiary of Tata Steel, has formed a joint venture with the Chinese government-owned HBIS Group and divested a 70 per cent stake in its South-East Asia business to the new entity for $327 million (about ₹2,322 crore).

Under the deal, Tata Steel will divest its entire stake in Singapore-based NatSteel Holdings Pte and Tata Steel Thailand to a joint venture company in which HBIS Group will hold the controlling stake of 70 per cent and Tata Steel will own the balance 30 per cent.

The deal, which was signed in Beijing on Monday, will be completed in three-four months.

The Singapore and Thai companies’ revenues of ₹5,181 crore and ₹4,361 crore, respectively, accounted for 4 per cent and 3 per cent of Tata Steel’s group revenue and their net worth is ₹1,039 crore and ₹1,303 crore, respectively.

Trimming debt

Tata Steel has been trying to trim its debt of over ₹1-lakh crore, and the deal will help transfer 70 per cent of the debt piled up in its South-East Asian operations. The new joint venture company will have an enterprise value of $685 million (about ₹4,800 crore) and debt of $150 million (about ₹1,000 crore).

TV Narendran, Managing Director, Tata Steel, said the definitive agreement offers the South-East Asia business a robust growth opportunity with access to resources, technical expertise and HBIS’ regional understanding.

Formed in 2008, HBIS Group is among the world’s largest steelmakers, with a production capacity of 46 million tonnes. It is a leading player in China’s home appliance and automotive steel sector, and supplies steel for nuclear power, marine engineering, bridges and construction.

The company’s revenues stand at over $40 billion and its assets exceed $50 billion. HBIS Group ranks 239th in the Fortune Global 500 list.

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