JSW Paints Considers Structured Credit Transaction Amidst Stalled Talks with Private Equity Investors

JSW Paints, the paint division owned by the Sajjan Jindal family under the JSW Group, is actively exploring a structured credit transaction to raise up to $100 million. The company is engaged in discussions with potential lenders for this purpose. In this transaction, JSW Paints plans to issue convertible preference shares. This decision comes as a result of challenges faced in selling a minority stake to private equity (PE) investors, primarily due to disparities in valuation expectations.

Efforts were made to sell a 5 percent stake in the business to prominent global PE funds, with Axis Capital serving as the advisor. However, these talks faced obstacles, primarily centered around the valuation sought by the Jindal family-held business. Internally, the group has valued the business at approximately $2 billion. The challenges in negotiations are attributed to changes in the competitive landscape of the paints sector, especially with the entry of the Aditya Birla group, indicating a potential price war for market share in the future.

In response to an industry estimate projecting the Indian paints and coatings industry to grow to Rs 1 lakh crore in the next five years from the present Rs 62,000 crore, JSW Paints aims to secure funds through a structured credit deal. Notably, this is the second instance where the JSW Group is exploring such a credit deal, following a similar move by JSW Cement in 2021.

Established in 2016, JSW Paints operates in both industrial and decorative paints, with facilities in Vasind, Maharashtra, and Vijayanagar, Karnataka. The Vasind unit focuses on industrial paints, boasting an annual installed capacity of 40,000 kilolitres, while the Vijayanagar unit is dedicated to decorative paints with a capacity of 90,000 kilolitres per annum. The company previously received a capital infusion of Rs 750 crore from JSW Steel in July 2021, emphasizing its strategic growth.

For comments on this development, an email query was sent to JSW Group, but no response was received at the time of publishing. The company remains proactive in exploring financial strategies to support its growth, showcasing resilience and adaptability in a dynamic market environment.

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