Vedanta to Create $10 Billion Fund for BPCL & more

Vedanta Resources Ltd, owned by Anil Agarwal and based out of UK, has created mega plans to constitute a $10 billion fund. Among other things, this fund will also bid for the government stake in Bharat Petroleum Corp Ltd (BPCL). Government has been planning to sell its residual 52.98% stake in BPCL, but that is unlikely to happen in this year since most of the preparatory formalities are still pending.

However, Vedanta has already clarified that the sole purpose of the fund will not be just the acquisition of BPCL assets, but it will look at a much broader inorganic franchise. The funds would be also used to bank roll other acquisitions that Vedanta has been planning in the specific field of mining and minerals. The fund will be looking at other such opportunities also as they arise from time to time.

Agarwal has confirmed that he was open to both options of funding BPCL through own funds or through debt or even a combination of two. Agarwal also clarified that they would look to bring in big fund names to also participate in this fund to jointly express interest in the BPCL bid. He confirmed that there was a lot of appetite among deep long term investors about taking positions in Indian government owned assets.

It may be recollected that Vedanta owns a slew of interests in India which it had acquired along the way. This include stakes in Balco, Hindustan Zinc, Sesa Goa, Cairn Energy etc. Apart from these interests in India, Vedanta also has extensive mining interests in South Africa and a precious metal refinery and copper rod plant located in the Middle East at the United Arab Emirates Fujairah Free Zone.

In addition, the Vedanta group is currently exploring opportunities for new zinc, gold and magnesium mines in Saudi Arabia also in the Middle East. Many of these countries are desperately looking to diversify their core interests and strengths beyond the traditional fossil fuel basket. Agarwal is looking at investing nearly $2 billion in the Kingdom of Saudi Arabia (KSA) to tap opportunities in this region.

The inorganic acquisitions of Vedanta will also cover green investments. The group has aggressive plans to gradually become zero-carbon by 2050. Towards this end, Vedanta plans to invest a whopping $5 billion in the medium term to reduce its carbon footprint. It will explore organic and inorganic ways. The $10 billion fund will be looking at all these opportunities in mines, minerals, materials and green additions to the portfolio.

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