Bloomberg
Vedanta's plan to buy govt’s stakes in HZ and BALCO may delay due to to pending parliament’s approval
Edited by : AL CIRCLE
2 min read
Billionaire Anil Agarwal’s plan to buy India’s stakes in units of his Vedanta Group may falter as the government insists on parliament’s approval for the deal, according to three people familiar with the decision.
The law ministry ruled that lawmakers have to agree to the sale, a process that could stretch indefinitely, said the people, who asked not to be identified, citing confidentiality terms. Vedanta, which raised its offer for the government’s 29.5 percent stake in Hindustan Zinc (HZ) Ltd. and 49 percent in Bharat Aluminium Co. by 20 percent to $3.93 billion in August, was betting on a cabinet decision, a swifter method, they said.
The stakes would give Vedanta complete access to almost $3.5 billion of cash, besides lead, zinc and bauxite mines. Agarwal, who expected to conclude the deal last year, needs the funds to expand mining operations at India’s biggest zinc producer, develop group company Sesa Goa Ltd. (SESA)’s iron ore project in Liberia and purchase coal mines to fuel his power plants and turn around the aluminum business.
“The ability and liberty to better deploy Hindustan Zinc’s cash will be a big positive for valuations,” said Deven Choksey, managing director at K.R. Choksey Shares & Securities Pvt. in Mumbai. “Government involvement has brought in operational inefficiency and deprived Vedanta of growth freedom.”
Senjam Raj Sekhar, spokesman at parent Vedanta Resources Plc (VED), didn’t answer a call to his mobile or reply to an e-mail.
The law ministry ruled that lawmakers have to agree to the sale, a process that could stretch indefinitely, said the people, who asked not to be identified, citing confidentiality terms. Vedanta, which raised its offer for the government’s 29.5 percent stake in Hindustan Zinc (HZ) Ltd. and 49 percent in Bharat Aluminium Co. by 20 percent to $3.93 billion in August, was betting on a cabinet decision, a swifter method, they said.
The stakes would give Vedanta complete access to almost $3.5 billion of cash, besides lead, zinc and bauxite mines. Agarwal, who expected to conclude the deal last year, needs the funds to expand mining operations at India’s biggest zinc producer, develop group company Sesa Goa Ltd. (SESA)’s iron ore project in Liberia and purchase coal mines to fuel his power plants and turn around the aluminum business.
“The ability and liberty to better deploy Hindustan Zinc’s cash will be a big positive for valuations,” said Deven Choksey, managing director at K.R. Choksey Shares & Securities Pvt. in Mumbai. “Government involvement has brought in operational inefficiency and deprived Vedanta of growth freedom.”
Senjam Raj Sekhar, spokesman at parent Vedanta Resources Plc (VED), didn’t answer a call to his mobile or reply to an e-mail.
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