Vedanta to demerge into six listed companies
Vedanta, which faces bond redemptions exceeding $3 billion over the next 18 months at its UK-based holding company, Friday said it would demerge into six listed companies to undergird the valuations of its revenue streams as diverse as mining, energy, and non-ferrous metals.
Mumbai-listed Vedanta, which produces copper, aluminium, iron ore and crude oil, and is a subsidiary of the London-based Vedanta Resources (VRL), said the exercise was aimed at building a simplified corporate structure that would appeal to focused investors. Separate listed companies for each vertical should boost the valuations of revenue streams that typically have slightly different business cycles and competitive dynamics despite sharing the broader industry classification of commodities and natural resources.
To be sure, the demergers require regulatory and shareholder approvals.
Through this move, billionaire Anil Agarwal-led Vedanta will carve out five new listed companies with existing investors getting one share each in the newly listed companies for every share owned in Mumbai-listed Vedanta.
In a similar move, Vedanta's locally listed subsidiary Hindustan Zinc will also consider a similar split into three companies, the latter said in a separate regulatory filing.
«By demerging our business units, we believe that will unlock value and potential for faster growth in each vertical,» Anil Agarwal, chairman, Vedanta, 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.»
Shares of Vedanta surged 6.84% Friday to close at Rs 222.5 on the BSE.
