A financier finds the future in an old industry
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Mittal's skill lies in finding bargains where others see little of value.
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Lakshmi N. Mittal
THE $17.8 BILLION, three-way deal that Lakshmi N. Mittal, a London-based financier, announced last week would put him at the head of the largest, most geographically diverse steel company in the world.
Despite his low profile in the U.S., international peers and investors say that Mittal's ascendancy was predictable — over several decades of acquisitions, he has shown an uncanny knack for buying assets shunned by others and turning them into viable businesses just before demand for their products surged. The new Mittal Steel would be made up of LNM Holdings and Ispat International, two Mittal family companies that would be merged and then would buy the International Steel Group for $4.5 billion.
The Mittal family would end up with 88 per cent of the new company. Once up and running, Mittal Steel would ship 57 million tonnes of steel a year from plants in 14 countries, and generate annual operating income of about $7 billion.
Mittal, 54, has made little secret of his intent to pursue more acquisitions in the future. "We are a global company, we look at opportunities,'' he said in a telephone interview. Steel industry specialists say that Mittal's skill lies in finding bargains where others see little of value. ``This guy has bought things that a lot of other people thought were dead ducks,'' said Peter Fish, the managing director at Meps (International), British consultant to the steel industry.
For example, ``while the Europeans and the Americans and the Japanese were sitting and thinking about'' investing in the former Soviet republics like Kazakhstan, Mittal moved in, Fish said. Admirers say he has the courage to take bold chances. ``You have to ask yourself, `Why is he, or Rockefeller, or any other big businessman, successful?''' said Erlan Idrissov, Kazakhstan's ambassador to Britain and formerly its minister of foreign affairs. ``I believe it is because he has guts.''
In many ways, Mittal does not fit the mould of a corporate poker player. In conversation, he is reserved and a good listener, associates say. He says he likes to spend his free time with his wife of 30 years, Usha, and also enjoys going to the gym. In an interview, he repeatedly deflects questions about personal ambition or his deal-finding acumen, and instead simply gives his outlook on the steel industry. ``I have always believed in consolidation,'' he said.
But Mittal, one of the wealthiest men in Britain, has far from austere tastes. Born in Calcutta, he has made his home in London for more than 20 years, and the British tabloids revel in reporting the spending habits of the man The Economist has called the ``Carnegie from Calcutta.'' In April, he purchased a house near Kensington Palace for an estimated 70 million pounds ($128 million). And in June, he threw a five-day, 1,000-guest wedding celebration in Paris for his only daughter, Vanisha, who married Amit Bhatia, a London investment banker who was born in New Delhi. He has also been criticised by some British politicians for donations to Prime Minister Tony Blair's Labor Party. In 2001, Blair wrote a letter congratulating the Romanian government on the sale of some mills to Mittal. At the time, Britain's local steel company, Corus, was shedding jobs, and some viewed Blair's support for a non-British company as suspect. Ispat International is based in Rotterdam, the Netherlands.
Even critics, though, say his views on the steel industry seem prescient. Mittal says he believes that in 10 years, the steel industry will be dominated by a handful of companies, which will ship 80 million to 100 million tons a year each. Today, the six largest producers control just 18 per cent of the world's steel output, according to the CRU Group, a metals consulting firm. That number will climb to 23 per cent.Lakshmi Mittal got his start in the steel industry at PT Ispat Indo, an Indian mining company founded by his father, Mohan Lal Mittal, and bought his first plant in Indonesia in 1976. He spent the next 20 years building up the company that became LNM, and its publicly traded operating company Ispat International, scouting and buying mills in Trinidad, Mexico and Western Europe. In 1995, he did what is viewed as the quintessential Mittal deal, buying up post-Soviet mills in Kazakhstan for an initial investment of $450 million. At the time, it was an area that few businessmen deigned to consider.
When Mittal bought them, the mills were bankrupt, the power supply was unreliable, and the workers had not been paid in six months. ``It was more of a mess than you can imagine,'' said Chris Beauman, senior adviser with the European Bank for Reconstruction and Development, which was trying to attract investors to the formerly Communist steel works, but had not promoted this one because it was viewed as a lost cause.
A year later, the Kazakh mills were running smoothly, and sales were flowing to China, Beauman said. ``He had taken what many thought was an unsolvable, horrific problem, and made it work,'' said Beauman. As bankers and lawyers put the final touches on the mammoth Mittal Steel deals, Mittal seemed remarkably unruffled, advisers said. A fortnight ago, when all the lawyers and investment bankers met in the office of one law firm, Mittal spent his time ``chatting to everyone from relatively junior lawyers to the great and the good, offering a handshake and a thank you,'' said one adviser who was there. ``He seemed to be thriving on it, not stressing on it.''
Heather Timmons
New York Times News Service
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