Overview of Transaction
GYS is a company engaged in the Structural Section Steel Business with an annual steel production capacity of 1 million tonnes per annum and a rolling capacity of 900,000 tonnes per annum. Before the sale, GRP and GRD held 81.07% and 18.93% respectively. Following the sale, GRP will retain a 5% stake with YKC holding 45%, SYS holding 35% and HWI holding 15% stake in GYS respectively.
The investment in GYS represents a strategic move by YKC, SYS and HWI to expand their business in Southeast Asia. The transaction, valuing GYS at US$450 million, underscores the immense potential and attractiveness of the Indonesian steel market. This transaction has delivered a significant premium to GRP's market capitalization and shareholders.
This transaction was secured in a volatile post-COVID market environment where the company was able to overcome significant business challenges through a relentless pursuit of value creation to maximize shareholder value. This investment by a diverse and strategic group of investors is a testament to the successful transformation of the company. Since the beginning of 2020, GRP has embarked on a transformation journey to become a strong and highly competitive steel company. It has successfully implemented various strategic policies in terms of change management, digital transformation, and drive towards sustainability to achieve a low-carbon future.
Strong Collaboration with Strategic Investment Partners
"With the collective financial strength and operational expertise of our investment partners, GYS is well-positioned to be the leading structural steel company in the region. We have exciting plans ahead to launch new steel products that will capture the immense market opportunities in Indonesia and will continue extracting further margin expansion through our production efficiency initiatives," said Tony Taniwan, the newly appointed President Director of Garuda Yamato Steel. Tony brings over two decades of experience in the steel industry. He currently serves as the Vice Chairman of the Indonesian Iron & Steel Industry Association (IISIA).
The acquisition of GYS by YKC, SYS, and HWI emphasizes their strategic vision to expand their presence in the domestic market, reflecting a shared vision for growth and prosperity in the region. The companies' collaborative effort aligns with the projected growth in national steel consumption, estimated to reach 18.3 million tons in 2024 with a 5.2% increase. Moreover, with 41 strategic priority projects in the construction sector, including the development of the Nusantara Capital (IKN), which requires around 9.5 million tons of steel, there's a substantial opportunity for steel producers like GYS to support Indonesia's infrastructure development. Collectively, the strategic investors will focus on growing their presence in SEA and be able to bring synergies through their expertise in the structural steel business, global procurement and marketing networks and financial strength.
"This strategic realignment not only creates tangible value for shareholders but also reinforces GRP's financial position, empowering management to focus on further enhancing the company's competitiveness and sustainability efforts," said GRP's Finance Director Roymond Wong.
For GRP, this transaction represents the culmination of a transformational journey embarked upon since the beginning of 2020. With a steadfast commitment to becoming a leading player in the steel industry, GRP has diligently pursued strategic initiatives in digital transformation, ESG strategies, and energy transition, paving the way for sustainable growth and development.
A Green Future Ahead for the Flat Steel Business
With the conclusion of the transaction, GRP will focus on its existing flat business and has big and exciting plans to transform into the lowest carbon-emitting steel producer in the region. This includes investing significant capital to adopt the most advanced, energy-efficient and technologically proven way of low-carbon steel making. In addition, GRP will be engaging heavily with key stakeholders to develop Indonesia's green steel standards that will position the company to distinguish itself from regional steel players.
"Our vision for the future of GRP lies in green steel and signals our strong commitment and support to Indonesia's government initiate to achieve net zero emissions by 2060. This requires a bold leap forward where cutting-edge steel technology meets our urgent need to address climate change. There is going to be massive market disruption as carbon policies around the world put pressure on supply chains to deliver low-carbon solutions and players that are not able to adapt will not survive," said Kimin Tanoto, Chairman of the Executive Committee. "We have shown the world that our team in GRP can deliver even in the toughest times to deliver a stellar outcome for all stakeholders. This time is no different. Going green is a smart business strategy that can lead to increased profitability, ability to attract top talent, and market competitiveness."
"The completion of this transaction is a culmination of GRP's transformational journey. Through this transaction we have achieved significant value creation for shareholders, bolstered GRP's financial strength and empowered management to focus on developing the flats business", said Kelvin Fu, Strategic Advisor of GRP. "As we embark on this exciting new chapter, the company remains committed to driving innovation, sustainability, and growth, not only for its stakeholders but also for the communities that we serve. We deeply appreciate the unwavering support, dedication, and confidence demonstrated by our Japanese and Thai investment partners, and we are committed to maintaining and enhancing our partnership."
About Yamato Kogyo Co Ltd
YKC (Mkt. Cap: US$3.3b) based in Japan manufactures and distributes steel products, railroad track components and industrial materials. Its presence includes Bahrain, Japan, Thailand, the US, Vietnam and South Korea. Website: https://www.yamatokogyo.co.jp/
About Siam Yamato Steel Co Ltd
Siam Yamato Steel Co., Ltd was established in 1992 to produce hot-rolled structural steel. It is a joint venture between Yamato Kogyo Co., Ltd. Mitsui & Co., Ltd, The Siam Cement Public Company Limited, Sumitomo Corporation (Thailand) Co., Ltd., and Mitsui & Co. Website: https://www.syssteel.com/
About Hanwa Co Ltd
Hanwa (Mkt. Cap: US$1.7b) is a leading Japan-based global trading company with major businesses in steel, metal recycling and primary metal, food products, energy and industrial machinery. Website: https://www.hanwa.co.jp/
About PT Gunung Raja Paksi Tbk
PT Gunung Raja Paksi Tbk is a member of the Gunung Steel Group, one of the largest private steel companies in Indonesia. Founded in 1970 in Medan, North Sumatra, our company began by producing hot steel and gradually expanded to produce steel beams and sheets.
With over 50 years of experience in the steel industry, we have a production capacity of 1,200,000 tons of high-quality steel each year, certified by both local and international certification organizations.
Today, our company has become one of the largest private steel companies in Indonesia. Gunung Raja Paksi, "Shaping Tomorrow". Together, we are developing a better future. Website: www.gunungrajapaksi.com
Source: PT Gunung Raja Paksi Tbk
Reporter: PR Wire
Editor: PR Wire
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