Vedanta Ltd. will split into six listed companies as billionaire Anil Agarwal's metals-to-mining conglomerate looks to unlock value at a time it faces debt concerns.
The company will demerge aluminium, oil and gas, power, steel, and metal businesses into separate listed entities, according to its exchange filing. The transaction is planned to be a simple vertical split, it said. Vedanta will continue to operate the display and semiconductor manufacturing units under itself.
Shareholders will get one share of each of the five newly listed companies for every one held in Vedanta.
Vedanta expects to receive SEBI approval in October and complete the process in FY25.
The shakeup will make the structure simpler for the indebted resources group, which has about $2 billion of bonds due to be redeemed next year. Moody’s Investors Service has lowered London-based parent Vedanta Resources’ rating deeper into junk. S&P Global Ratings had also revised the rating outlook to negative from stable to "reflect the heightened refinancing risk".
A cleaner structure makes raising capital easier and allows investors to bet on individual businesses.
"By demerging our business units, we believe that will unlock value and potential for faster growth in each vertical," Agarwal said in a statement. "While they all come under the larger umbrella of natural resources, each has its own market, demand and supply trends, and potential to deploy technology to raise productivity."
New Companies And CEOs
Arun Misra: CEO of Vedanta
Steve Moore: Deputy CEO of Vedanta Oil and Gas
Navin Jaju: CEO of Vedanta Steel & Ferrous
Chris Griffith: CEO of Vedanta Base Metals
Vibhav Agarwal: CEO of Vedanta Power
John Slaven: CEO of Vedanta Aluminium
Goals Behind Demerger
The Mumbai-headquartered conglomerate said it will simplify the corporate structure with sector-focused independent businesses. It will provide opportunities for global investors, including sovereign wealth funds, retail investors, and strategic investors, with direct investment opportunities in dedicated pure-play companies, it said.
"With listed equity and self-driven management teams, these demergers provide a platform for individual units to pursue strategic agendas more freely and better align with customers, investment cycles, and end markets," the company said.
Sterlite Tech Rejig
The group also restructured other businesses. Agarwal's investment arm Volcan Investments Ltd. has been renamed as Vedanta Inc. It will operate Sterlite Technologies Ltd., Sterlite Power Transmission Ltd., Serentica Renewables and Konkola Copper Mines Plc.
Shares of Vedanta ended 6.86% higher on Friday ahead of the announcement, compared with a 0.59% rise in the benchmark Nifty 50.
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