Birla’s Novelis puts off IPO in US, cites market ‘conditions’

Novelis, a part of Kumar Mangalam Birla’s Hindalco Industries, has decided to postpone its $945-million IPO in the US due to market conditions. It will continue to evaluate the timing of the IPO, the aluminium producer based in Atlanta said.
Novelis didn’t elaborate on the market conditions that led to its decision of halting the IPO.
Hindalco had planned to sell 45 million shares or 7.5% of Novelis for $18 to $21 each. At the top end of the price band, Novelis would have a market value of $12.6 billion.
“The decision to delay the IPO is a bit disturbing given that Hindalco’s management is usually very thoughtful,” Kunal Kothari, analyst at Centrum Broking, was quoted as saying.
“There could be a view at Hindalco that they think internal accruals could be enough for financing future projects and they don’t need external sources of funds.”
According to reports, analysts at AJ Bell had pointed towards the unpredictability of commodity prices which could make Novelis “hard to sell”. The US stock market has been on a roll the last few weeks with all three leading indices - Dow Jones, S&P500 and the Nasdaq Composite - at near their all-time high levels. However, there is some nervousness about the high interest rates in the US and for over a year now, investors globally have been speculating when the US Fed could cut interest rates.