Anil Agarwal became successful in delisting of his various companies and restructuring of Vedanta Group after multiple attempts and with initial rebukes from investors. His delisting plan for Vedanta Ltd had faced similar drubbing from investors, mainly from LIC of India, which had 6.37 per cent stake in the company.
The new open offer plan of Vedanta promoters at Rs 160 a share to buy 10 per cent stake from the public is seen as a renewed attempt towards delisting of Vedanta Ltd. The offer price is lower than the current market price of Rs 175.
The state-run insurer LIC had upset the earlier delisting plan in October and submitted all its shares at Rs 320 a piece, which was 267 per cent premium to the earlier floor price of Rs 87.25. LIC's bid price became the discovered price in the reverse book building process, while many others also bid at the price of Rs 320. Another set of investors had tendered the shares at Rs 150-160.
The promoters wanted to buy the shares held by public back at a cost of Rs 16,000 crore. The price at which LIC tendered the shares had made the delisting costlier by around Rs 40,000 crore.
The open offer is not a surprise for market experts. "The promoters did the creeping acquisition and now looking for open offer to increase their stake. The move may be seen as a precursor to delisting," says a Mumbai-based analyst. However, the official sources say that the open offer has nothing to do with delisting.
Agarwal-owned Vedanta Resources along with Twin Star Holdings, Vedanta Holdings Mauritius and Vedanta Holdings Mauritius II has made a fresh open offer to acquire 37.17 crore equity shares representing 10 per cent of its group company Vedanta at Rs160 a share. The company would spend Rs 5,948 crore, if the open offer turns fully executed. The share price was Rs 182 when the offer came to public. JP Morgan India is the manager to the open offer.
The promoter group company Vedanta Holdings Mauritius had hiked stake in its subsidiary Vedanta by 4.98 per cent through creeping acquisition with an investment of Rs 2,959 crore. Vedanta Resources had raised $400 million last month through issue of debt papers to an entity of US-based hedge fund Oaktree Capital Group to meet its immediate liquidity requirements. The promoter firms also raised $1 billion through issue of one of the highest yield dollar bond in Asia.
The market capitalisation of Vedanta stands above Rs 65,000 crore. The public holds about 49.5 per cent stake in Vedanta.
The delisting of Vedanta would have given the company complete control of its cash-rich subsidiary, Hindustan Zinc (HZL), given that Vedanta Resources has debt of about Rs 40,000 crore.