Vedanta likely to raise upto Rs 2,000 crore, ropes in LIC

Mumbai: Vedanta Ltd is preparing to sell long-term bonds for the first time in the Indian market, with Life Insurance Corporation set to purchase the entire Rs 2,000 crore worth 10-year paper on offer, dealers said.

“The issuer will likely offer 1.25 times security to LIC” against its investment, a market participant with direct knowledge of the matter told ET. This means, the metals and mining company will provide security worth Rs 2,500 crore to the insurer.

The company will use the proceeds both to fund capital expenditure and refinance existing debt, the dealers said.

The issue of non-convertible redeemable debentures will open for subscription next Monday on the exchange-driven electronic bidding platform, they said. They expect the bonds to offer rates in the range of 8.5-9%.

This is the first time that Vedanta is tapping LIC for funds. The bond sale could set a benchmark for other large companies reaching out to the country’s largest insurer.

Vedanta and LIC did not immediately respond to ET’s emails seeking comment.

Ratings company Crisil has rated the issue at AA with a stable outlook.

“The ratings continue to reflect strong resilience in business risk profile, driven by Vedanta’s diversified presence across commodities, cost-efficient operations in domestic zinc and oil & gas businesses, and its large scale of operations,” the local ratings firm said in a note on January 10.

“These credit strengths are partially offset by the high, albeit reducing, leverage, coupled with large capital expenditure plans, and susceptibility of its businesses to volatile commodity prices and regulatory risks,” it said.

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Vedanta Ltd is the flagship Indian entity of the Vedanta Group, which is one of the world’s largest diversified natural resource groups.

Vedanta Ltd’s aluminium and power business has signed an agreement to deploy GE’s digital smelter solutions at its largest smelter at Jharsuguda in Odisha, ET reported on February 17.

The move, which is tipped to significantly increase its operational efficiency and productivity, will be the first such deployment of digital twin technology at any aluminium smelter in India.



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