Vedanta Ltd. plans to demerge its businesses into six listed entities, a strategic move aimed at unlocking value and attracting investment for growth. Learn how this restructuring will impact the company’s future.
In a strategic move aimed at unlocking significant value and attracting big-ticket investments, Vedanta Ltd. has announced its plans to demerge its businesses into six separate listed entities. This decision was approved by the company’s board of directors and is expected to reshape the landscape of the metal and mining conglomerate.
Vedanta Ltd. will be restructured into six distinct listed companies. These entities are Vedanta Aluminium, Vedanta Oil & Gas, Vedanta Power, Vedanta Steel and Ferrous Materials, Vedanta Base Metals, and Vedanta Limited itself. Shareholders of Vedanta Limited will receive one share in each of the five newly formed companies for every share they hold in Vedanta Ltd. This redistribution aims to provide shareholders with diversified investment opportunities. The demerger is primarily driven by the desire to unlock the inherent value within Vedanta’s diverse portfolio of businesses.
By creating independent listed entities, Vedanta aims to optimize capital allocation and pursue tailored growth strategies for each vertical. The newly formed companies are committed to sustainability goals. They plan to invest $5 billion over the next decade to achieve net-zero carbon emissions by 2050 and net water positivity by 2030. Additionally, Vedanta has secured 1.8 GW of renewable energy through power delivery agreements.
The demerger provides investors with more focused investment choices. Each entity will operate as an independent profit center, potentially leading to a more efficient capital structure, which is likely to benefit long-term investors. Vedanta expects to complete the entire restructuring process by the fiscal year 2025, subject to regulatory approvals. The company plans to file for approval from the country’s markets regulator in October 2023.
The market has already responded positively to this development, with Vedanta’s shares rising by 6.8% following the news of the demerger. Anil Agarwal, Chairman of Vedanta, expressed his excitement about the move, highlighting India’s growth trajectory and the need to cater to the rising demand for minerals, metals, oil, gas, and power. He emphasized that each entity would continue to prioritize the well-being of its workforce, communities, and the environment.
This strategic restructuring not only reflects Vedanta’s commitment to adapt to changing market dynamics but also positions the company to contribute significantly to India’s growth story. As the demerger unfolds, it is expected to attract substantial investor interest and set the stage for accelerated growth in each of the listed entities.