Sanjay 'Saviour of Steel' Gupta has approached rival commodity traders for loans after one of his main financial backers ran into trouble. One of his main source of financing, as per public documents, has been GAM, a Swiss asset manager which owned a significant amount of at least $2.8 billion of bonds issued on behalf of Gupta's family companies. It has been retrenching after it identified breaches of company policy by one of its star fund managers. So for now, Gupta has turned to his own rivals for financing. In January, he agreed to buy the Dunkerque aluminium smelter, Europe's largest, from Rio Tinto for $500 million, as part of a multibillion-dollar plan to build a manufacturing business in northern France producing components for the automotive industry.
His Liberty House has asked several trading houses for at least $160 million in loans linked to the smelter. A trader said, “He is going around to more alternative financiers. It shows you the traditional channels are blocked.” While banks normally provide the type of credit Gupta currently seeks, commodity traders also sometimes provide financing when they sell raw materials. However, in this case the raw alumina to the plant is being supplied by Rio Tinto and Gupta has approached rival third-party traders.
A Liberty spokesman said some of the funds it was seeking was “normal inventory financing” and there was nothing unusual about it.
