Vedanta's $27 Bn Gamble: 5-Way Split to Double Market Cap, Slash $11 Bn Debt

India's mining and metals giant Vedanta is set to split into five separate, independently listed companies next month. Its Chairman Anil Agarwal believes the move could dramatically boost the group's overall value and help chip away at a mountain of debt.

The Mumbai-listed conglomerate, which has an enterprise value of around $37 billion, will be carved up into five focused businesses: aluminium, zinc (and silver), oil and gas, steel, and power. Every existing Vedanta shareholder will receive one additional share in each of the four newly demerged companies, effectively giving them a stake in all five businesses at no extra cost.

Agarwal spoke to the Financial Times about his ambitions for the restructured group. The combined market value of the five companies, he told, should comfortably be double the current figure. Vedanta's market capitalisation currently sits at around $27 billion.

The restructuring plan is also aimed at tackling the group's heavy debt load. Earlier, the plan had faced resistance from the Indian government, but that challenge was overturned following a legal battle.

Vedanta's total debt currently stands at roughly $11 billion, according to S&P Capital IQ. The newly formed companies are expected to collectively carry about $7 billion of that burden, while each entity will have the flexibility to raise capital independently and attract investors suited to their specific sectors.

Anil Agarwal launched the overhaul in 2023, after a previous attempt to take Vedanta private in 2020 had failed. The demerger, he said, will give each business "a free hand to grow" and "create phenomenal shareholder value." A privately held parent company controlled by Agarwal will retain roughly half the shareholding in each of the demerged entities.

The restructured Vedanta will also act as an incubator for new businesses, including the group's technology verticals.

Vedanta's Chief Financial Officer Ajay Goel had said in January that the company aims to list the four planned demerged units on Indian exchanges by mid-May.

Meanwhile, not all recent news from the Vedanta camp has been positive. The group recently lost out to Adani Enterprises in the race to acquire debt-laden Jaiprakash Associates, despite having submitted a higher bid.