Mumbai, Nov. 6: Vedanta Resources, the main holding company for Anil Agarwal’s diversified metals and mining businesses in India, today announced a Rs 3,150 crore ($700 million) initial public offering (IPO) to be listed on the London Stock Exchange.
“Vedanta is a very exciting story. Its position in the industry gives it a strong platform to benefit from India’s mineral wealth and dynamic growth. The London listing will enable investors around the world to share the benefits of growth in Indian mining and metals markets,” said Anil Agarwal, the founder and CEO of Sterlite group.
The promoters control group firms through a web of cross-holdings. The London-based Vedanta will own 55.2 per cent of Sterlite, and 80 per cent in Madras Aluminium Company (Malco) through its arm, Twin Star Holdings.
Sterlite, in turn, owns 51 per cent of Bharat Aluminium Company (Balco), the third largest aluminium company in the country, and 46 per cent of Hindustan Zinc. The group acquired Balco and Hindustan Zinc from the government as part of the selloff process.
Vedanta resources is owned and controlled by the Agarwal group, the existing promoters of Sterlite and Malco. The group recorded a turnover of Rs 4414.5 crore ($981 million) during the year ended on March 2003.
“The gross proceeds of the initial public offer are expected to be $700 million and will enable Vedanta to realise its growth opportunities,” the group said in a release.
Vedanta will invest over $2 billion over the next three years to beef up operations and develop new projects. These include having a bigger aluminium smelter for Balco and Orissa alumina refinery, besides carrying out a series of expansion plans for Hindustan Zinc. The cash will also help repay high-cost loans taken earlier.
Balco plans to raise the annual capacity of its alumium smelter to 345,000 tonnes from 100,000 tonnes and the one at its alumina refinery to 220,000 tonnes from 180,000 tonnes.
“Vedanta’s asset base and strong market shares in key commodities offer entry into the Indian economic boom,” said Brian Gilbertson, Vedanta’s chairman, who the group says has “transformed” firms around the world.
J P Morgan is the financial adviser and sponsor to Vedanta Resources in its effort to join the official list of UK Listing Authority. HSBC and J P Morgan Securities are joint global co-ordinators of the planned IPO.