Vedanta unit seeks $1.4 billion mega loan from three banks: Report

Vedanta Aluminium Metal Ltd, a unit of the Vedanta Group, is raising about ₹13,500 crore ($1.4 billion) through loans from at least three banks, marking the first large local-currency borrowing since the conglomerate split into separate companies, as per a report.

According to Bloomberg that cited people familiar with the matter, Axis Bank has signed a loan agreement worth ₹5,500 crore with Vedanta Aluminium Metal Ltd., the people said. HDFC Bank and ICICI Bank will together lend about ₹8,000 crore to the company. The lenders are expected to syndicate a portion of the loan, with Axis Bank leading the syndication process.

MUST READ | 'Ladka theek lagta hai...': How Atal Bihari Vajpayee helped Anil Agarwal list Vedanta in London

The loans will have tenors ranging from six-and-a-half years to seven years. According to the people, the proceeds will be used to refinance existing debt inherited by Vedanta Aluminium under the group's earlier integrated corporate structure. The banks are offering interest rates in the range of 7.9% to 8%.

Representatives of the Vedanta Group, Axis Bank, ICICI Bank and HDFC Bank did not immediately respond to requests for comment.

The fundraising comes as Vedanta seeks to establish independently financed businesses following its corporate restructuring, a move aimed at improving financial flexibility and reducing debt. The new structure received approval from an Indian court in December.

DON'T MISS | Tata Steel, Vedanta among top metal bets for a six-month view, says analyst

Vedanta has since split its businesses into five separately listed companies. Four of these – focused on aluminium, power, oil and gas, and iron ore – began trading on stock exchanges in June.

The refinancing also comes amid strong credit demand in India. Reserve Bank of India data showed bank lending rose 17.7% year-on-year to ₹217.3 lakh crore as of July 15, nearly double the growth recorded during the corresponding period last year.