PE Farallon Capital in talks to buy 24% Essar Steel stake for ₹1,700 crore

Private equity investor Farallon Capital is likely to acquire a 24 per cent stake in Essar Steel for $250 million (Rs 1,700 crore) as part of restructuring of the Ruias-owned firm. "As part of restructuring of Essar Steel, the financial investor –Farallon Capital –has been roped in to invest $250 million (Rs 1,700 crore) for a 24 per cent equity stake," a source privy to the development said.

The company is expected to utilise the funds from the financial investor to complete its second pellet project in Odisha, the source said.

The current debt of Essar Steel is Rs 44,000 crore, which also includes working capital.

The San Francisco-based Farallon Capital has over $20 billion of assets under management. This is first major investment in the steel industry in the past few years reviving investors' interest in the sector.

When contacted, company sources said "it is inappropriate for us to comment since this is in the realm of speculation".

Essar Steel is one of the first large-sized infrastructure and core sector players to have a package for debt restructuring being considered by lenders at a time when many of the schemes like S4A, SDR and the like have not been able to resolve the lenders' concerns. In 9 months till Dec 2016, Essar Steel posted a growth of 60% in steel production to over 4 million tonnes.