Sanjeev Gupta’s Australian steel business has been sounding out
investors about a bond sale, in a big test of whether institutions are willing
to lend to the metals magnate in spite of ongoing criminal investigations of
his business empire.
Executives from metal recycling and distribution business InfraBuild met
bond fund managers in New York last week, the first time one of Gupta’s
companies has met a broader group of investors since the collapse of his main
lender Greensill Capital plunged his businesses into crisis in 2021.
While the investor meetings — which continue in London this week — are
not a formal bond roadshow, the company and its bankers at Jefferies have been
informally sounding out investors on a potential bond issue, according to
people familiar with the meetings.
Investors have been asked whether they would consider buying a new US
dollar bond at a yield of about 14 per cent, the people added, with the company
targeting a deal as large as A$1bn ($670mn).
They said the higher yields were being offered to compensate for the
reputational risks of lending to a company owned by Gupta, whose GFG Alliance
group of companies is under criminal investigation in the UK and France.
InfraBuild has told investors it does not believe it is a target of
these investigations.
Investors have long seen InfraBuild as one of GFG’s stronger businesses
— and unlike many other companies in the group it has its
accounts audited by a Big Four firm — but several investors told the Financial
Times they were unwilling to lend to the company.
“The underlying business is not horrible, it’s just I don’t want to walk
into the office one day and have the wrong kind of headlines,” said one New
York-based bond fund manager. “It’s just not worth my time.”
GFG said: “InfraBuild continues to perform strongly and has secured the
backing of top-tier investors for its growth plans.”