Vedanta Is Preparing to De-Merge Sprawling Operations

Vedanta Ltd. is nearing a deal to spin off its businesses into several listed entities in a broader restructuring that will help commodities tycoon Anil Agarwal unlock shareholder value, people familiar with the matter said.

Vedanta Is Preparing to De-Merge Sprawling Operations
Vedanta Is Preparing to De-Merge Sprawling Operations

Vedanta Ltd. is preparing to spin off businesses into several listed entities in a broad restructuring that, if successful, could help tycoon Anil Agarwal manage his metals-to-energy empire’s debt load, people familiar with the matter said.

The company has informed its lenders of the intended restructuring and could announce the plans in the coming days, according to the people. Businesses including aluminum, oil and gas, iron ore and steel will be separately listed, they said, asking not to be identified as the information is confidential.

Vedanta Ltd.’s parent, Vedanta Resources, will remain the holding company, the people said. Deliberations are ongoing and no final decisions on the structure or timing of the de-merger have been made. 

Resolving a byzantine corporate construct has been a priority for years for Agarwal’s indebted Vedanta Resources, but a global increase in borrowing costs has raised the stakes, with about $2 billion of bonds due to be redeemed next year. In August, Agarwal floated a plan to separate out some of its businesses, but provided no details.

Vedanta Is Preparing to De-Merge Sprawling Operations

Among the potential hurdles ahead is the group’s use of its own stock in Vedanta Ltd. and in key cash-generating unit Hindustan Zinc to secure debt. According to stock exchange data, it has pledged virtually all of its majority holding in both companies.

“Vedanta Ltd. has limited ability to de-merge other units given creditors have charge of cash-generating assets, particularly Hindustan Zinc,” said Deven Choksey, managing director of brokerage KRChoksey Shares & Securities Pvt. in Mumbai, adding Vedanta would nevertheless be right to tap heightened global equity investor interest in India.

Vedanta’s debt remains under pressure. The group’s August 2024 and March 2025 bonds are trading below 75 cents on the dollar, levels typically considered distressed. Moody’s Investors Service this week pushed the parent’s ratings deeper into junk, citing the elevated risk of debt restructuring over the next few months.

Shares in Vedanta Ltd. on Thursday gained as much as 2% in Mumbai trading, the most since Sept. 14. The stock has fallen about a fifth over the past 12 months. Meanwhile, Hindustan Zinc shares fell about 0.6%.

Vedanta Is Preparing to De-Merge Sprawling Operations

A streamlined structure could also help Agarwal hive off unprofitable or low-growth assets — something the billionaire has long avoided — while allowing investors to bet on some of the company’s newer ambitions, including in semiconductors and display glass.

Representatives for Vedanta Ltd. and Vedanta Resources didn’t respond to requests for comment.

Read More: Vedanta Tumbles as Moody’s Cuts Parent Ratings Deeper Into Junk

--With assistance from Catherine Bosley, Abhishek Vishnoi, Divya Patil and Hemal Savai.

(Adds detail and comment in paragraphs 5 and 6, share price in paragraph 8)

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