Paper manufacturer Bilt files documents for Singapore IPO for Dutch arm

India’s largest paper company Ballarpur Industries Ltd (Bilt) is looking to float its Dutch subsidiary Ballarpur International Graphic Paper Holdings (BIGPH) through an initial public offer (IPO) in Singapore, the company said in a stock market disclosure.

It said BIGPH has made first submission of draft offer document for possible offer and listing of its equity shares on the main market of the Singapore Stock Exchange (SGX-ST) and Monetary Authority of Singapore (MAS) on July 21, 2014.

The group, which has around half a dozen paper production units including one in Malaysia, had previously explored overseas listing options and even announced plans to raise $330 million through a listing on the London Stock Exchange. Bilt had later postponed and eventually put the plans on the back burner. It was eyeing a valuation of around $1.5 billion for the overseas arm's listing in 2011.

The latest move comes a month after it said it may raise funding from IFC, a lending arm of World Bank Group, for BIGPH through a combination of debt and/or equity.

IFC may invest as much as $250 million in the firm, including up to $100 million in equity, ‘A’ loan of up to $50 million and a ‘B’ loan/parallel loan of up to $100 million. This would comprise over half of the total project cost estimated at $472 million and would make it one of the single biggest bets of IFC in what is essentially an Indian firm, to date.

Seven years ago Gautam Thapar-led Avantha Group company went through a corporate restructuring by hiving off the commodity paper & pulp business into a separate step down subsidiary backed by JP Morgan and Singapore’s sovereign wealth fund GIC.

The idea, back then, was to drive a better valuation for the commodity part of paper business and to raise capital for further expansion at better terms. This was anchored on the argument that commodity paper business derives better valuation multiple in international markets compared with India.

The parent company Bilt was left with the front facing or retail side of the paper business including stationery paper, printing and photocopy paper and speciality paper, apart from the branded retail products under Bilt.

However, in 2012 it had flipped its strategy to move almost all of its paper production business in the country under this arm. As of June 30, 2013, Bilt indirectly held 79.2 per cent in BIGPH while the remaining stake was with GIC (11.7 per cent) and promoter’s private holding firm Avantha International Assets BV (9.1 per cent).

Bilt shares last changed hands at Rs 18 each, up 4 per cent on BSE in a strong Mumbai market on Tuesday.

(Edited by Joby Puthuparampil Johnson)

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