Jai Saraf may bid for VedantaSteel biz against ex-employer

Former ArcelorMittal executive Jai Saraf is discussing a potential bid for Vedanta’s steel business, ESL Steel, with private credit funds, according to multiple people in the know.

London-based Saraf, who used to be an executive member of the Mittal Steel board, is looking to build a consortium that could include Nithia Capital, a fund he cofounded in 2010, and certain financial investors, the people said.

Vedanta has pegged ESL’s value at ₹10,000 crore, though it may have to settle for less. ESL Steel, directly owned by India-listed Vedanta Ltd, has an annual capacity of 1.5 million tonnes and is looking to double that. Saraf’s move could pit him against his former employer, as ArcelorMittal is also said to be independently evaluating a bid for ESL. Those talks are said to be on the backburner because of valuation differences.

Saraf, Nithia Capital and ArcelorMittal didn’t respond to queries.

Vedanta said it aims to sell assets that aren’t key to its business. “Our publicly announced intent of non-core assets disposition remains intact,” said a Vedanta spokesperson. “Right now, we have witnessed interest from both domestic and international players. The process in terms of due diligence, data rooms, Q&As and site visits is ongoing.”

He said a deal was expected in the next few months. “We are hopeful to get some offers by this quarter end, and sometime early next quarter, we see the deal going through,” the person said.

Backstage Story

Saraf and Nithia cofounder Johannes Sittard were colleagues at Mittal Steel until the early 2000s, after which they branched out on their own. At Mittal Steel, they are credited with turning around several stressed steel plants in Trinidad and Tobago, Mexico, Germany, Canada and Kazakhstan.

In 2021, Nithia Capital partnered CarVal, a $10-billion fund spun off from US commodities company Cargill, to acquire Uttam Galva’s 3.1-million ton per annum steel business under the Insolvency and Bankruptcy Code (IBC) route. AllianceBernstein, a US investor which has $725 billion under management, now owns CarVal.

ESL Steel had been acquired by Vedanta under IBC in 2018 for ₹5,320 crore. The deal had marked its foray into the steel business.

ET first reported on November 15, 2022, that Vedanta had put ESL Steel on the block. It aborted the first attempt to sell the company as the turnaround was perceived to be incomplete and, therefore, the rich valuation sought wasn’t thought to be justified. It launched a second attempt to sell the company some time last year.

Vedanta Ltd, which has net debt of ₹20,000 crore, has announced a plan to spin off various businesses that will result in the creation of six listed units.

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