Vedanta Resources, the mining empire headed by Indian billionaire Anil Agarwal, has drawn up secret plans to float its £4bn Zambian copper subsidiary on the London stock exchange.
The group’s Zambian offshoot, KDC, could seek to raise £500m in a London listing that may bring on board blue-chip British and European investors.
Agarwal ,who was born in Bihar, wants to slash borrowings at Vedanta. Analysts at Liberum Capital expect the group’s debt to soar to £7.5bn (higher than Vedanta’s £6bn market valuation) once the firm gets Indian government approval to acquire a controlling stake in Cairn India’s oil operations, in a deal under discussion since August.
Agarwal, who owns a home in London’s Mayfair, feels the value of KDC, which has the capacity to produce 200,000 tonnes of copper a year, is not reflected in Vedanta’s stock price and is keen to float it separately. The Zambian government owns a small holding, but is not expected to raise any objections to a London flotation.
Agarwal’s plan is supported by Vedanta’s investors, which include Legal & General, Standard Life and Fidelity. Agarwal owns a 62% stake.
Vedanta, a UK-listed company headquartered in London, has come under fire from environmental campaigners. It was recently ordered to scrap plans to develop a bauxite mine in an area of southern India deemed sacred by local people. And two weeks ago, it had to shut a copper smelter because of concerns over pollution.
Agarwal’s parallel move to spend £4.3bn on a 51% stake in Cairn India, controlled by Edinburgh-based Cairn Energy, has upset some investors, worried that the company has no experience in oil and is taking on too much debt. Agarwal is keen to make Vedanta an “Indian natural resources champion”, competing on the world stage with titans such as Lakshmi Mittal.
The tough regulatory stance taken by the Indian authorities has made it more difficult for Vedanta to secure financing for the Cairn India deal. But RBS and Standard Chartered are understood to have agreed to provide Vedanta with a bridging loan.
According to Forbes, Agarwal who was born in India’s Bihar region, is close to breaking into the ranks of the world’s 100 richest people, with a fortune of £4bn. He left school at 15 and started a scrap-metal business in 1976, building it up through acquisitions.