Keith Towns discusses Indian billionaire Kumar Mangalam Birla’s potential decision to sell finance unit stake before listing Aditya Birla Financial Services.

Keith Towns of Emerge Financial Group
Towns, CPA and Finance Guru, reflects on Birla's decision to sell stake

( — September 1, 2016) Suisun City, California — Keith Towns, an experienced financial specialist who has established an impressive track record in the finance industry, discusses Indian billionaire Kumar Mangalam Birla’s potential decision to sell a 5% stake in Aditya Birla Group’s financial services unit as a way to raise capital, providing a valuation gauge for Aditya Birla Financial Services, a business he plans to list in June 2017.

Aditya Birla Group is a $41-billion Indian multinational conglomerate headquartered in Mumbai, India. Operating in 40 countries with over 120,000 workers worldwide, the group is involved in sectors such as cement, viscose staple fibre, viscose filament yarn, metals, carbon black, chemicals, branded apparel, insulators, fertilizers, telecom, BPO and IT services. The group considers financial services to be the next growth area, as traditional businesses like chemicals and cement are expanding at a subdued pace.

It has been recently announced that a group restructuring would occur, combining Aditya Birla Nuvo Ltd. and Grasim Industries Ltd. into a firm with $9 billion in revenue. One of the main motivations behind this, says Keith, is to secure cheaper financing for the financial services unit. However, this triggered a stock rout in the two merging firms.

According to Saurabh Agrawal, chief strategy officer of Aditya Birla Group, there is a “provision for raising some primary capital as part of the merger” between Aditya Birla Nuvo and Grasim. “For financial services, the requirement is capital. If somebody comes to us and gives us very attractive terms, then we will evaluate it.”

Head of group corporate finance Ashish Adukia said that Religare Capital Markets Ltd.’s valuation for Aditya Birla Financial Services Ltd., which was 156 billion rupee (or $2.3 billion) seemed low. He did not comment further on the unit’s value, but said that the unit considers selling new shares to private equity firms as well as to sovereign funds. Aditya Birla Group is currently seeking to raise over $200 million through the stake sale, according to individuals who are familiar with the matter, who asked not to be named since the information is private.

Adukia has stated that the company may sell 5% “only towards the end of the merger scheme” and that “It’ll be totally opportunistic…”

The merged firm will have a 57% stake in the finance business while the owners will have a 17% stake. The rest will be held by the public, according to a presentation dated Aug. 11 on Grasim’s website.

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Keith Towns is a financial expert who has worked in various corporate and private settings over the course of his career. He has successfully completed numerous accounts and has helped hundreds of clients in the finance industry. He is the owner and CEO of California-based Emerge Financial Group, a financial analysis firm that provides a variety of financial solutions designed to cater to the needs of the business sector.

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