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This episode explores Vedanta's shift in strategy as it announces a demerging spree after believing that mergers create more shareholder value. It discusses Vedanta's attempts to raise funds through Hindustan Zinc and the opposition faced by investors and the Indian government.
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Quick takeaways
- Vedanta's decision to embark on a demerger strategy aims to create six listed businesses on the stock exchange, offering investors more choice and potentially making fundraising easier.
- The demerger strategy could address Vedanta's high debt levels by providing an opportunity to find buyers for stakes in the newly listed entities, generating cash to settle the company's debts and potentially avoiding credit rating downgrades.
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Vedanta's shift to demerger strategy
Vedanta, a conglomerate with diverse businesses in commodities such as copper, iron ore, oil and gas, aluminum, has decided to embark on a demerger strategy, creating six listed businesses on the stock exchange. The rationale behind this shift is that pure-play listed companies are currently preferred in the investing environment. By listing each entity separately, it gives investors more choice and could make fundraising easier. Additionally, each entity will have dedicated management with specialized expertise, potentially unlocking greater value and enabling faster growth.
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