Vedanta delisting fails
Moneylife Digital Team 10 October 2020
Vedanta Ltd.’s controversial delisting process, which had angered its investors, has failed as per data available on the BSE (Bombay Stock Exchange) website. The metals major, led by billionaire Anil Agarwal closed a five-day reverse book building (RBB) process yesterday evening. 
 
Vedanta promoters required 134.1 crore shares to successfully delist from the exchanges. As per the demand schedule released by the BSE at 7.30 pm yesterday evening, there were only 125.47 crore shares tendered as confirmed bids. The BSE data showed that about 12.32 crore shares tendered are yet to be confirmed.
 
There was a sudden twist in the delisting story on Friday evening. Earlier in the afternoon, Vedanta appeared to have successfully completed the delisting process based on bids received till late afternoon. In fact public shareholders had tendered 137.1 crore of the total 169.73 crore shares held by them but some bids were pending confirmation from bankers and custodians. 
 
However bankers and the custodians were unable to provide final confirmation of the bids received for 12.31 crore shares. The RBB was to end at 3.30 pm yesterday but due to glitches earlier in the day (due to which some shareholders allegedly faced trouble in tendering shares), the BSE extended the bidding till 7 p.m.
 
News reports suggest that two large mutual funds have tendered their shares at Rs 153 and Rs 160 per share respectively. LIC (Life insurance Corporation), which holds a 6.37% stake in Vedanta Ltd, tendered all its shares at a price of Rs 320, a 267% premium over the floor price of Rs 87.50, thus hiking the cost of the delisting considerably.
 
Bankers (DAM Capital and JP Morgan) to the delisting offer have requested market regulator SEBI (Securities and Exchange Board of India) for a one-day extension, claiming that glitches in the BSE tendering webpage upset public participation. It is not yet known if SEBI will allow that extension and it remains to be seen whether such an extension will be adequate for the delisting process to achieve the necessary 90% threshold.
 
Provided they find success in the first leg of the transaction (by crossing this mandatory 90% threshold), promoters can make a counter offer on 13th October at any price above book value if the discovered price is not acceptable to them. The final outcome of the success or failure of the delisting would be known on 16th October. If delisting is successful, promoters will have to pay within 10 days to minority shareholders who have tendered their shares. The remaining shareholders will have up to one year to tender their shares at the exit price.
 
It looks likely that even if they cross the first hurdle (90% threshold), the counter offer they will need to make is going to be considerably higher. It is possible that the LIC bid price would then most likely be the discovered price for the delisting process. If Vedanta accepts the price, it has to offer all shareholders Rs 320/ share.

 

Comments
ganesanjaicare
1 year ago
SEBI should order probe and enquiry regarding vedanta delisting saga and bring the truth.always retail investors taken for ride. today commodity stocks are up around 15 percent from 10 days low.but vedanta not participated .something is promoter manipulating with help of brokers and market intermediaries.
kpushkar
1 year ago
Which MF put it at 153 and 150 bid??

They should be named and shamed .. better to get out of that fund completely as they are puppets
pawan
Replied to kpushkar comment 1 year ago
What if 153 and 160 is not seen for next 3 years? Would you still say the same?
veereshmalik
1 year ago
For many of us first time punters, including those of us who think they know the fine print, the big elephant in the room remains about how to refuse the counter-offer and not see the shares in escrow vanish. As of now it appears to be an automatic opt-in for all bidders; when by rights it should have been an automatic opt-out at the very least for those with bids at or above the counter-offer number.

That is one big reason I have not placed too many of my shares on bid, and those that I have placed on bid are at high levels in the 1000-5000 rupee range - but this play safe approach probably kept some shareholders from bidding.

Finesse at the finish line also probably kept promoter friendly retail share-holders out to bring in an element of guesswork on the final number.

Fact remains, the dividends here at Vedanta have been good, and there are huge values lying unopened also at Sterlite Copper and Sesa Goa - so back to the de-listing.

I am holding on to about 55% of my holdings and will release the other 45% only if offered 320/-. My averaged price is about 155/-.
animesh.vadehra
Replied to veereshmalik comment 1 year ago
I had similar thoughts initially but after I did my research and spoke to experienced folks, I decided to bid all my shares in RBB. I'll be more than happy to get Rs. 320 being discovered price or even upto Rs. 300 as well, as my CP is also Rs. 158.

Why it is not a good idea to keep shares of a private company is that they can anytime increase the face value of the share to few lakhs, making you a fractional shareholder. Post which, they'll go ahead and settle you with some payment. Also, you are not assured of dividend as well.

If I were you in today's situation, I would sell my balance shares at 2/3 % discount in the market, which will likely be little less than the discovered price and pay STT for LTCG / STCG benefit. If one surrenders the shares directly to the company in next 1 year, the capital gain will be added to the income and income tax has to be paid at higher rate.

That's my understanding, you may take a call what suits you better.
veereshmalik
Replied to animesh.vadehra comment 1 year ago
"Vedanta's stock tends to move with the whims of Agarwal, who owns a 61% stake in the company."

Most of us base our assumptions on 50+40=90 as per SEBI
Motley Fool tends to believe that 61+29 would be = 90

Which leaves 39% shares out in the non-promoter quantum.

There are games underway and the ASD of VEDl at NYSE is a better indicator.

Methinks LIC knows something which probably Govt of India also knows and so eventually 320 will be the call if LaLaJi wants to achieve non-listed status

I am going to be, therefore, a buyer at levels around 108 and then downwards in steps

My current average price is close to 150 and my holdings are to my mind substantial, the dividend was and is attractive, regardless of being re-designated leakage or otherwise

animesh.vadehra
Replied to veereshmalik comment 1 year ago
Now, as the situation is more clear that RBB has failed and there'll be no counter offer either, we can expect volatility for a few days. This makes it a better proposition to average. But, I'll start averaging only < 100 and the next one < 90.

As the fundamentals of the company hasn't changed, it makes sense to invest for enjoying future dividends :)

LIC may have taken the call of Rs. 320 considering their upcoming IPO, am not too sure but there may be a bigger game going on at the higher levels on more PSUs' sale.
Newme
1 year ago
Extending by a day is no big deal for AA. He can easily pull the strings. However is he ready to delist at 320Rs? Otherwise atleast minority shareholders will get the 12.5Rs HZL dividend which is around 8-9% of the market price.
animesh.vadehra
1 year ago
Nice article. As a retail investor, I would like to know whose bids were still unconfirmed by the last day. Also, would like to know if they actually gone ahead and bid, what was the reason for not confirming till the last stage.
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