FerroGlobe Resources Group — Investment Thesis, Returns & Exit
The investment thesis, the projected returns including the 27.5% equity IRR and 4.6-year payback, and the exit pathways available to investors.
Section 17 · Business Plan
Investment Thesis, Returns & Exit
The investment thesis, the projected returns including the 27.5% equity IRR and 4.6-year payback, and the exit pathways available to investors.
17.1 Investment Thesis Summary
FerroGlobe Resources Group offers a rare combination of
structural-tailwind exposure, proven business architecture,
capital-efficient deployment, and multiple liquidity paths — anchored in
the largest steel market on the African continent and underpinned by
experienced management. The four pillars of the investment thesis
are:
| 1 | Structural demand-supply gap | Africa imports 70%+ of its steel demand against a 17 Mt deficit. ArcelorMittal SA’s 2025 wind-down of the Longs Business removes ~1 Mt of domestic supply. Structural deficit creates durable, multi-decade trading and processing demand. |
| 2 | Proven business architecture | FGRG’s vertically integrated trader-producer model is the same architecture deployed by Duferco, Trafigura, Stemcor, and Sumitomo. The model is well-understood by capital markets and benefits from a body of public-company comparables. |
| 3 | Capital-efficient deployment | Phased $750M capital deployment over 36 months, with each phase self-funding (or near-so) before the next. Trading franchise generates positive operating cashflow by Y2; downstream assets layered only after the trading base is established. |
| 4 | Multiple liquidity paths | JSE listing (steel-sector revival following ArcelorMittal SA challenges); LSE secondary listing; strategic sale to global merchant peer; PE recapitalisation. EV/EBITDA exit multiples of 5–7× imply upside to base-case IRR. |
17.2 Returns Summary
17.3 Comparable Company Analysis
FGRG’s projected Year-7 financials position the Company within a
defined peer group of mid-cap emerging-markets steel and trading
platforms. Indicative trading multiples for the peer group are
summarised below:
| Peer / Reference | Geography / Type | EV/EBITDA (range) | Implied FGRG Y7 EV |
|---|---|---|---|
| Mid-cap EM steel producers | Asia / EMEA | 5.0–7.0× | $4.4B – $6.1B |
| Steel merchant traders | Global / private | 4.5–6.5× | $3.9B – $5.7B |
| Vertically integrated platforms | Global majors | 6.0–8.0× | $5.2B – $7.0B |
| Median (FGRG comparables) | Blended | 5.5–7.0× | $4.8B – $6.1B |
17.4 Exit Strategy
Three exit paths are considered, in approximate order of
likelihood:
Option A — JSE Main Board listing (preferred)
Following the operational ramp through Year 6 and the commissioning
of the greenfield mill in Year 7, FGRG would target a JSE Main Board
listing in Year 7 or Year 8. The listing would offer LP partners a clean
liquidity event, would re-capitalise the balance sheet for the next
phase of growth, and would establish a public-market valuation
reference. JSE-listed industrial peers trade at EV/EBITDA multiples in
the 5.5–7.5x range, implying an exit market capitalisation of USD
4.5–6.0B at Year 7 EBITDA. A secondary listing on the London Stock
Exchange would be considered to broaden the institutional investor
base.
Option B — Strategic sale
FGRG would represent an attractive bolt-on acquisition for several
global merchants and integrated producers — including Duferco, Stemcor,
ArcelorMittal Trading, Tata International, and Sumitomo’s steel
division. Each represents a credible counterparty with the strategic
rationale (geographic footprint, scrap-based capacity, African market
access) and financial firepower to absorb FGRG. Strategic sale typically
commands a control premium of 20–30% over public-market multiples.
Option C — PE recapitalisation
In the event public markets are not constructive at the exit window,
a private-equity-led recapitalisation provides an alternative liquidity
path. Several large EM-focused private equity funds (Helios, Development
Partners International, Actis, Carlyle Africa) have demonstrated
appetite for African industrial assets at scale. A recapitalisation
could provide a partial liquidity event for early-stage investors while
continuing the growth trajectory.
Confidential — this business plan is provided to prospective investors and lenders for evaluation purposes only and may not be reproduced or distributed without the written consent of FerroGlobe Resources Group (Pty) Ltd.