Vedanta Resources, the parent company of Indian metals-to-oil firm Vedanta, has decided to sell a 2.6% stake in Vedanta Ltd to a group of institutional investors,reported Reuters. This move comes as an U-turn from a week ago when Vedanta Chairman Anil Agarwal stated that there were no plans for a stake sale by the company's controlling shareholders.
The stake will be sold through Vedanta Resources' unit, Finsider International, which held a 2.63% stake in Mumbai-listed Vedanta as of March-end. The financial details of the deal and the names of the investors have not been disclosed yet. This decision aligns with Vedanta Resources' commitment to significantly deleverage its balance sheet.
The decision by Vedanta Resources to sell its stake in Vedanta Ltd could be influenced by several factors.
Vedanta Resources may be aiming to reduce debt on its balance sheet. Selling a stake in Vedanta Ltd could provide liquidity and help them manage their financial obligations more effectively. Companies often reassess their portfolio and strategic priorities. By divesting a stake, Vedanta Resources might be reallocating resources to focus on other core businesses or investment opportunities.
The total gross debt of Vedanta Resources stood at $6 billion as of March 31. On completing the stake sale, the firm would have reduced its debt by $650 million so far in fiscal 2025.
The timing of stake sales can be influenced by market dynamics. If Vedanta Ltd's stock price is favorable, it could be an opportune moment for Vedanta Resources to exit partially. Companies sometimes need to comply with regulatory requirements or maintain a certain level of public float. Selling a stake could help meet these obligations.
Institutional investors or active shareholders may have encouraged Vedanta Resources to unlock value by selling part of their stake. It is to be noted that these are speculative reasons, and the actual motivations may vary.
Advertisements