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Vedanta cancels restructuring: A topsy-turvy move?
We have been hearing the same comments about the restructuring. CLSA came and slammed it down and so did most other mutual fund and hedge fund investors.
Here is a verbatim transcript ofRaja Rajeshwari'scomments on CNBC-TV18. Also watch the accompanying video.
We have been hearing the same comments about the restructuring. CLSA came and slammed it down and so did most other mutual fund and hedge fund investors. Yesterday we saw the story where Children's Hedge Fund, a UK's activist fund had issues with it pretty much post the restructuring. Most people that we spoke to on the record; off the records have been saying that this is detrimental to minority shareholders and that is exactly been the point that are struck around. Why they have increased their holding in some of their companies? Why this structure again whether is Vedanta Aluminium on top of Sterlite Aluminium and why you couldn't have merged it? Why there is so much of capex going to Vedanta Aluminium? Were the shareholders holding into Vedanta Aluminium has also gone down because of the Twinstar holding getting collapsed into Vedanta Aluminium. You also had issues of how KCM (Konkola Copper Mines) was valued about? How Asarco is kept out of this whole deal but will it fall under? So, there were lot of question marks being raised about this whole restructuring.
We got a couple of underrating, ratings-cut coming in from some of the few foreign brokerages also post this restructuring and that is exactly the point why they were going to rethink. We had this coming because post two days there were so many negative questions being raised about this restructuring. The management completely went into a silent period and refused to talk to media post that. They have been on road shows, finished Asia and had gone to US, then they have come in UK where they faced severe issues and this is exactly what they are taking at point in time.
Mr. Rakesh Arora of Macquarie pointed out that most analysts kicked about the future of how aluminium and energy was going to. There was a lot of rethinking on the power front itself because about one year ago if you were to look at, a lot of excitement was created about the Sterlite Energy IPO (Initial Public Offering) which Mr. Anil Agarwal came and clarified that he is not looking at an IPO as of now. In midst of that, there were rumours that they could go in for large QIP (Qualified Institutional Placement) which the management said no.
They may probably consider it post restructuring. So, it has been a topsy-turvy move for them and largely taking feedback from this road show they could have considered this going forward.
But you need to wait and watch if they are going to take feedback from all these investors as Mr. Rakesh Arora of Macquarie pointed out to make it more simplistic. Join Vedanta and Sterlite together so that you get a mix of both aluminium and power companies together because if just take a look at JSPL, Jindal Steel & Power Ltd, it is a play of steel and power together and most institutional investors are kicked about that business model. If indeed they take the feedback and do that then you will have a thumbs-up for Sterlite going forward.
