Commodity major Hindustan Zinc offer for sale gets bids for Rs 3,150 crore

Promoter less than half of what Vedanta was eyeing

The offer for sale (OFS) of commodity major Hindustan Zinc (HZL) garnered bids for only 63.6 million shares from institutional investors, less than half of 133.7 million on offer.

At the indicative price of Rs 495, the offering saw bids worth Rs 3,150 crore.

Promoter Vedanta was aiming to raise over Rs 6,500 crore by divesting 3.17 per cent stake.

Market experts said the sharp slide in shares of HZL in secondary market trading and the recent Supreme Court order allowing states to collect past tax dues from mining companies weighed on demand for the share sale.

But the apex court order isn’t seen impacting HZL significantly.

 

 

The base size of the OFS was 51.44 million and the greenshoe option was set at 82.3 million. Vedanta can only partially execute the greenshoe option.

Another 13.4 million shares meant for retail investors will be auctioned on Monday. If the retail portion is fully subscribed, Vedanta will be able to mop up another Rs 650 crore.

The base price for the OFS has been set at Rs 486.

Shares of HZL fell 9.4 per cent to end at Rs 518 on the NSE, where almost Rs 600 crore worth of shares changed hands.

The base price is 6.2 per cent below the last close.

Typically, existing shareholders sell their shares in the secondary market and apply in the OFS to pocket the arbitrage gains.

Citibank and JM Financial are the investment bankers handling the share sale.

At the end of June 2024, Vedanta had a 64.92 per cent stake, while the central government held 29.54 per cent in HZL.

If the retail portion is fully subscribed, Vedanta’s stake in HZL will drop by 1.82 per cent.

Hindustan Zinc, the country’s largest producer of zinc, is currently valued at Rs 2.2 trillion.

Anil Agarwal-led firm HZL’s stake divestment is part of the drive of Vedanta and UK parent Vedanta Resources (VRL) to pare its debt.

In June, Finsider International, a unit of VRL, had sold 2.6 per cent stake in domestically-listed Vedanta to mobilise Rs 4,184 crore, which was used to cut its debt.

At the end of June, Vedanta's net debt was Rs 61,324 crore, and gross debt stood at Rs 78,016 crore. As of March 31, VRL’s debt levels stood at around $6 billion.

In July, Vedanta had also raised Rs 8,500 crore (nearly $1 billion) in fresh capital, issuing 193.1 million new equity shares at an issue price of Rs 440 a piece. It was through the qualified institutional placement route.

End-July, global rating agency S&P Global Ratings had upgraded VRL’s rating to 'B-' (stable rating) from 'CCC+', citing improving capital structure and liquidity.

“The stable outlook reflects our view that the company will proactively address the maturity of $1.2-billion debt in April 2026,” the rating agency said in its research update.