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Amarchand, AZB hammer out $1bn Japanese JSW steel investment


AZB & Partners advised Japanese steel giant JFE that bought 14.9 per cent for $1.02bn in India's third largest steel maker JSW, which was advised by Amarchand Mangaldas.

Amarchand partner Gunjan Shah led a team of principal associate Puja Sondhi and senior associate Devottam Sengupta for JSW while AZB partner Shameek Chaudhuri acted for Japanese steel makers JFE.

Shah said: "It is a long term partnership between JFE and JSW, and not merely a financial investment by JFE. As already known, they have entered into several technology licensing agreements and technology assistance agreements as well, so it’s a partnership between the two entities not just for financial returns, but also for strategic reasons."

The M&A transaction involved numerous technical arrangements between the two entities such as  technology license and technical assistance agreements for the production of automotive steel at JSW, general technical assistance and supply of substrate by JFE to JSW. 

"The current understanding is that the investments will be made in three tranches. A bulk of Rs 4,800 will come by September and the remaining Rs 800-900 crores will come over the next eighteen months," added Shah.

The agreement was signed yesterday (27 July) with closing expected in September 2010.

The transaction will take place through a preferential allotment which could take the form of either equity issue or convertible debentures.

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