September 3, 2019 / 9:37 AM / 17 days ago

Exclusive: GFG Alliance puts on hold steel unit's $675 million Australian IPO - sources

SYDNEY (Reuters) - GFG Alliance has delayed a planned A$1 billion ($675 million) listing of parts of its Australian Liberty Steel unit until at least next year as a result of market volatility, two people with knowledge of the matter said.

Work had been underway to float parts of the steel business within the next two months in what would have been, according to Refnitiv, the largest listing in Australia since July 2018 when Viva Energy (VEA.AX) raised A$2.6 billion.

Investor meetings with Australian fund managers about Liberty Steel, part of a roadshow ahead of launching any float, were to have taken place during September but have now been canceled, the two people said, on condition of anonymity because the information was not yet public.

Bankers working on the deal have been told to “put their pens down” until next year, one of the people said.

The person added the tightness of GFG’s year-end timeline and concerns about market volatility led to the delay.

The Australian benchmark index marked its first monthly drop this year in August, amid broader financial market turmoil stemming from persistent U.S.-China trade frictions.

Earlier on Tuesday, Australia’s central bank kept its cash rate at an all-time low of 1%, but left the door ajar for further cuts, saying it was “reasonable to expect” lower for longer interest rates to help boost employment growth and inflation.

GFG is now not expected to test investor appetite until at least the second quarter of 2020, according to one source.

The London-based conglomerate had bought Liberty Steel from Australia’s Arrium after it went into administration in 2017.

A GFG spokesman declined to comment on the IPO being shelved, but said, “we are always open to capital market transactions as part of our broader strategy”.

GFG is owned by commodities tycoon Sanjeev Gupta. The conglomerate owns commodities trading, mining, metals, power generation and renewable energy assets worldwide.

Under the initial IPO plans for its Liberty Steel unit, GFG had planned to package together the local distribution and recycling assets of the old Arrium steel business which would be renamed Infrabuild, Reuters has reported.

GFG had previously appointed JPMorgan (JPM.N), Morgan Stanley (MS.N) and Deutsche Bank (DBKGn.DE) to lead the planned IPO and Clayton Utz had been carrying out the legal work.

Deutsche closed its Australian equity capital markets business in early July as part of its global program to cut 18,000 jobs across the bank.

Representatives for JP Morgan, Morgan Stanley and Clayton Utz declined to comment.

Reporting by Scott Murdoch; Editing by Himani Sarkar

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