Vedanta to tie up with investor, set up specific fund to bid for BPCL

Anil Agarwal company to invest $500 mn in LCD facility

Anil Agarwal-owned Vedanta will tie up with an investor to set up a specific acquisition fund to make a bid for Bharat Petroleum Corporation which is slated for privatisation by the Indian government.

Vedanta said in case BPCL transaction culminates, it may undertake management of the acquired business, through appropriate profit-sharing arrangement or on management fee model. “A specific fund, with a strategic investor, will be set up to fund the potential investment, without leveraging Vedanta’s balance sheet,” the company said in a statement today. 

While ruling out any spin-offs of its existing businesses, Vedanta said its capital allocation policy will be the primary guiding factor and will focus on organic growth, and will consider select mergers and acquisitions. 

BPCL, with a market valuation of Rs 82,000 crore will be a big ticket divestment by the Indian government which plans to sell its entire 53 per cent stake in the oil marketing and exploration company. The divestment is currently at the expression of interest stage.

Apart from acquiring BPCL,  Vedanta said one of its subsidiaries AvanStrate Inc is a pioneering manufacturer of LCD glass substrates using the world's leading technology and is one of the main global producers of LCD glass. “With the increased hybrid working and growth of demand in India for smartphones, laptops, TV etc, this area provides ample opportunity to participate with a world-renowned equity JV partner. The Government of India has also announced a substantial subsidy scheme and this will be a significant import substitution for India. The maximum investment in this line of business will be around $500 million over a period of 2-3 years,” it said. 

One of the promoter entities of Vedanta group, Twinstar had, in fact, participated in the bidding of Videocon Industries consumer durable business but its bid was set aside by the NCLAT which asked VIL’s lenders to seek fresh bids. This was after few lenders of VIL objecting to the 95 per cent haircut taken by the lenders while clearing a Rs 3,000 crore offer from Twinstar.

“We will continue to focus on operational performance to enhance profitability and free cash flows. We are committed to right levels of leverage and strong balance sheet to maximize shareholders value,” Anil Agarwal, Chairman of Vedanta group said. Agarwal owns 70 per cent stake in Vedanta which has a total market valuation of Rs 1.37 trillion.