Vedanta Share Prices Drop by 8% After Promoters' 4.3% Stake Sale via Block Deal

Twin Star Holdings, a significant owner of Vedanta Ltd, has sold 4.3% of its stake (160 million shares) for about ₹4,136 crore. The move aims to enable Vedanta's transition to cleaner energy and managing debt. This has reduced Twin Star Holdings' ownership from 46.4% to 42.1%.

Twin Star Holdings Starts Cutting Vedanta Stake

In a strategic move that has caught the attention of market observers, Twin Star Holdings, the primary promoter entity for Vedanta, recently unveiled plans to divest a portion of its shares to institutional investors. This decision comes as part of billionaire Anil Agarwal's calculated efforts to steer Vedanta Group toward a more focused and sustainable future.

Twin Star Holdings, which holds a substantial 46.4% stake in Vedanta, equivalent to 1.72 billion shares valued at around ₹1.01 trillion, initiated a block deal. The deal saw a 4.3% stake in Vedanta being sold, with Twin Star Holdings setting a minimum price of ₹258.50 per share. This marked a deliberate 5% discount from the previous day's closing price of ₹272.15 on the National Stock Exchange of India Ltd.

Market analysts have raised eyebrows at this move, which resulted in a noteworthy reduction of Twin Star Holdings' stake in Vedanta. Once standing at 46.4%, the promoter's stake has been strategically lowered to 42.1%. This calculated decrease has left industry experts curious about the rationale behind this discounted divestment.

The motive behind this strategic decision becomes clear when considering Anil Agarwal's vision for Vedanta Group. The conglomerate is now set to transition into a more focused enterprise, pivoting towards cleaner green energy and non-ferrous activities. This forward-looking approach aligns with Agarwal's broader strategy of reducing the debt burden of the Vedanta Group.

As Twin Star Holdings steps back and relinquishes a portion of its control, the future of Vedanta takes on a new shape under the stewardship of Anil Agarwal. The discounted block deal serves as a bold step toward a greener, more sustainable future for the conglomerate, marking a significant shift in the trajectory of Vedanta's journey.

It is crucial to highlight that the agreement's conditions include a seller's lock-up period of 180 days, which entails limitations on the sale of any extra shares throughout this duration. The focus of the share sale appears to be mainly directed toward eligible institutional buyers.

As a result of a substantial block deal on the stock exchanges, the value of Vedanta's shares underwent a steep descent of nearly 9% on Thursday. This led to a corresponding decrease in the share price of Vedanta, causing it to plunge to as low as ₹247.80 per share on the Bombay Stock Exchange (BSE). This price level placed it marginally above its lowest point in the previous 52 weeks, which had been ₹245.85 per share on August 4, 2022.

Over the course of this year, Vedanta's shares have sustained an overall decline of 18%, a significant portion of which, amounting to 9%, was observed in just a single month.

Previous Developments and Challenges:

Vedanta Resources Ltd, the parent company of Vedanta Ltd, has embarked on an aggressive mission to tackle its substantial debt, which had reached $6.5 billion as of May 2023. Concerns have arisen among investors about the heavy reliance on dividends from Indian subsidiaries, raising fears of depleting reserves within these units.

The conglomerate, Vedanta Resources, witnessed its debt soaring to $16 billion by March 2022, prompting a bold initiative to transition into a zero-debt entity within two to three years. As part of its unwavering pursuit of debt reduction, the recent stake sale marks just one component of a series of strategic measures being implemented and planned.

Vedanta's Future Strategy: Addressing $2B Debt in Future

Vedanta Resources is dealing with upcoming debts of around $2 billion next year, so they're looking for ways to get more money. They've managed to get $1.3 billion recently, with help from JP Morgan, Oaktree Capital, Glencore, and Trafigura. They've also kept aside $1.7 billion for short-term things like putting money in banks, buying bonds, and investing in mutual funds. This information comes from their financial statement from March 31, 2023.

Future Plans: Cleaner Energy and New Tech Ventures

Anil Agarwal has big plans for Vedanta. They're not just selling some ownership, but they're also considering selling another business. They want to start a massive project in cleaner energy and are ready to spend $20 billion on it. Even though a previous plan with another company didn't go well, Agarwal still believes they can work together in different areas.

Vedanta is talking to tech companies and getting ready to become a leader in cleaner energy and other new fields. Agarwal really wants Vedanta to grow and also take care of the environment.

Agarwal's vision is to create a $20 billion green energy project. This includes important projects related to technology and electronics in places like Gujarat, Telangana, and Karnataka. Although a plan with a company from Taiwan called Foxconn had some problems before, Agarwal still thinks they can work together in other parts of this technology field.

Agarwal said that Vedanta Group is ready to handle the challenges of its debt. He said, "We have a special plan to deal with our debt situation," and he talked about how Vedanta has a lot of money coming in. They are talking to three different technology companies to help with their plans for making things like computer chips. Agarwal thinks they can make their first chip in about 2.5 years.

With all their plans and hard work, Vedanta Group is changing into a company that's really good at cleaner energy and other important things. This shows how much Anil Agarwal cares about making Vedanta grow and also making sure they do good things for the environment.