Sanjeev Gupta turns to Brookfield for loan

British industrialist Sanjeev Gupta is in talks to borrow hundreds of millions of dollars from Brookfield, after turning to the Canadian asset manager for funding at a time when one of his main lenders is under pressure.

Gupta, who was dubbed the “saviour of steel” in the UK for his acquisitions of unloved metals plants, is looking to pledge a stake in one of his most prized assets for the funding, according to people directly familiar with the negotiations.

The proposed loan would sit at a holding company above Gupta’s InfraBuild business in Australia, the people said, cautioning that the talks might not result in a deal. They added that Brookfield, an investment powerhouse with more than $500bn in assets, is the only potential lender Gupta has been in discussions with.

The talks began when the metals magnate was looking to pull off one of his biggest deals to date, with an audacious bid to acquire Thyssenkrupp’s steel business. While the German steelmaker broke off talks last week, Gupta was still looking to borrow the money, the people said.

InfraBuild, an Australian steel and recycling business, is considered one of the Indian-born industrialist’s most stable assets. The business recorded $12m of profits and $218m of adjusted earnings before interest, tax, depreciation and amortisation in the year ending June 2020.

The Financial Times revealed last week that German financial regulator BaFin has asked Greensill Bank to reduce its exposure to Gupta’s businesses. The German lender is a subsidiary of Greensill Capital, a SoftBank-backed company that employs former UK prime minister David Cameron as an adviser.

Over the past five years, Greensill Capital has provided billions of pounds of financing to Gupta’s GFG Alliance — a loose collection of family-owned businesses that through an acquisition spree has turned into a sprawling empire, spanning metals to banking, with $20bn in revenues.

But BaFin has grown increasingly concerned about the level of exposure linked to Gupta at Greensill Bank, a near century-old lender based in the German city of Bremen. Greensill took over the bank, formerly known as NordFinanz Bank, in 2014.

Gupta has a close relationship with Lex Greensill, the 44-year-old Australian banker who founded the finance company, and previously held a stake in Greensill Capital.

Gupta’s GFG Alliance and Brookfield declined to comment.

Gupta has several times in the past few years looked at a stock market float for InfraBuild. The company supplies construction products and operates separately from the Whyalla steelworks, whose purchase for about A$700m ($552m) in 2017 marked his entry into Australia. 

InfraBuild had a disastrous debut in bond markets in 2019 after potential lenders balked at the opaque nature of GFG. Gupta was forced to inject $150m of his own money as a concession to win over investors, which still charged InfraBuild an interest rate of 12 per cent on the $325m bond.

The debt has since rallied, however, and now yields less than 9 per cent on the secondary market.

Additional reporting by Kaye Wiggins