Vedanta shareholders in for a bonanza? $3 billion fundraising may help raise delisting price 60%

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August 19, 2020 5:28 PM

Anil Agarwal’s Vedanta had earlier secured an approval from the shareholders for taking the company private and had prior to that floated a delisting price of Rs 87.50 per share.

Earlier in March, Duggal was given additional charge as Vedanta's Interim CEO.The parent company of Vedanta Ltd, secured a bank commitment of $1.75 billion and recently raised senior secured bonds of $1.4 billion, maturing in three years with a 13% coupon.

Anil Agarwal’s Vedanta Resources might be able to raise the price of delisting of its unit Vedanta Ltd to as much as Rs 139 per share, up about 60% from the original price, going by the successful $3.15 billion fundraising by the parent company, Kotak Securities said. With funds secured, the mining major could return to the table to take the delisting process forward after getting an approval from the shareholders for the same in June this year, Kotak Securities said in a report on Wednesday. Shares of Vedanta Ltd were trading at a price of Rs 128 per share on Wednesday. The Rs 139 per share delisting price, as estimated by Kotak Securities, is at a 8.5% premium to the current market price.

The parent company of Vedanta Ltd, secured a bank commitment of $1.75 billion and recently raised senior secured bonds of $1.4 billion, maturing in three years with a 13% coupon. Anil Agarwal’s Vedanta had earlier secured an approval from the shareholders for taking the company private and had prior to that floated a delisting price of Rs 87.50 per share. To take the delisting process ahead, Vedanta will now have to secure an ‘in-principle’ approval from the stock exchanges. Kotak Securities added that Vedanta had delayed this step to secure funds for the delisting.

Currently the promoters own 50.1% stake in the company while 45.9% is held by the public shareholders. 4% of the company shares are held through ADRs. “For delisting, the promoter needs to acquire 45.9% public holding in India or 1,704 million shares and $3.15 billion implies the ability to pay at least Rs139/share,” Kotak Securities said. In the Reverse Book Building process, the clearing price for the delisting would be the bid price of the 90% percentile shareholder. “Our calculations suggest that 90% of share capital (ex-ADR) could be reached by acquiring 36.35% public shareholding,” Kotak Securities added. At the end of the April-June quarter institutions held 34% of the shareholding in Vedanta.

However, the estimated price of delisting and the current market price of the stock are significantly higher than the proposed delisting price by the company earlier this year. Some market participants do believe that Anil Agarwal’s plan to take Vedanta off the bourses might not go through.

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