JSW plans to offload some colour stake for $100 mln

Publicly listed JSW led by billionaire Sajjan Jindaluture is considering selling a potential portion of JSW Paints as part of its goals for strategic expansion. The company seeks to increase its capabilities and establish a national presence in order to compete with more established, bigger competitors in the market. The family-owned paints company is valued at around $2 billion in the sale, according to JSW Group, which has retained Axis Capital as an advisor. Preliminary discussions have begun with prominent international private equity funds. JSW Group is initially aiming to raise $100 million for a tiny minority position, or approximately 5% of the company, according to sources with knowledge of the situation.

JSW Paints is a relatively young player in the market, founded in 2016 and led by Parth Jindal. It has two plants in Vijayanagar, Karnataka, and Vasind, Maharashtra, and specializes in both ornamental and industrial paints. One source claims that a portion of the revenues from the share sale will go toward capital expenditures and debt repayment. Recent corporate filings show that JSW Paints has been expanding, investing $13.5 million in FY23 to increase capacity and streamline production in the industrial and ornamental markets.

NewsOTG gathered that it has announced plans for a substantial capital expenditure of $101 million (Rs 750 crore) that will be funded by debt over the medium term in order to construct an integrated factory that can produce both industrial and decorative paints. Publicly listed JSW Steel made an arm’s-length investment in JSW Paints in July 2021 for $101 million (about Rs 750 crore). Three payments were made for the investment, the first of which was $40.3 million (about Rs 300 crore) and represented a 7.5% equity stake on an issued and paid-up capital basis and a 6.88% equity stake on a fully diluted basis. JSW Steel then agreed to invest $33.4 million ($250 crore) in FY23 and $26.7 million ($200 crore) in FY24.
JSW Paints indicated its plan to use the capital to develop operations in both the industrial and decorative categories. The goal was to establish itself as a major player across all of India and take on well-known rivals like Asian Paints, Berger Paints, and Kansai Nerolac Paints. According to industry forecasts, urbanization trends will cause the domestic paints market to approach $13.5 billion (Rs 1 lakh crore) during the next five years. JSW Group is investigating the stake sale in JSW Paints to expand its market share and secure its place as a dominant force in the industry.