InvestorQ : Why did the Vedanta delisting bid not go through?
vaishnavi mhatre made post

Why did the Vedanta delisting bid not go through?

vidhya Laxmi answered.
8 months ago

As per SEBI regulations, for any delisting to be successful, 90% of the total capital had to be mopped up. Since Vedanta promoters already had over 50%, they needed to mop up another 40% thereabouts before they could delist the stock.

In the specific context, promoters needed to mop up a total of 1.34 billion shares of Vedanta to be eligible to delist. In the end, they could only muster 1.25 billion shares because LIC did not budge from its price of Rs.320/share, which was the price suggested by proxy advisors.

The promoters had set the floor price at Rs.87.50 and based on the funds raised, they were willing to go up all the way to Rs.140 or so. But Rs.320 was totally out of their affordability range. Hence they had to let the delisting lapse.

Vedanta had raised debt from banks and from the markets up to $3.20 billion which would have been enough to pay a price of Rs.150-160 at best. However, LIC, which owns 6.7% in Vedanta, refused to tender shares below Rs.320/share, which would have entailed $6.5 bn.

However, there are some serious questions that arise. It is not clear how Vedanta claimed to have mustered 1.37 billion shares when it had only managed to muster 1.25 billion shares? It also raises serious questions over transparency and disclosure standards.

Finally, there is the issue of price volatility around the delisting time. SEBI may need to probe what caused the price volatility and also the allegations of profiteering. SEBI will, hopefully, look into the issue much more elaborately.