Vedanta’s Rs 8,500 Cr QIP: Repaying Union Bank, Oaktree, and Deutsche Bank for Strategic Growth

Vedanta Limited, a major metals and oil company, plans to use the Rs 8,500 crore raised from a Qualified Institutional Placement (QIP) to repay or prepay loans from Union Bank of India, Oaktree, and Deutsche Bank.

Company’s Overall Debt

This move aims to reduce the company’s overall debt, lower debt servicing costs, and improve its debt-to-equity ratio. This will allow Vedanta to better use its earnings for business growth and expansion, according to the company’s QIP filing with stock exchanges.

The funds will mainly go towards repaying outstanding borrowings of both Vedanta Limited and its subsidiary, The Zinc Ventures Limited (THLZV), with some funds used for general corporate purposes.

THLZV’s Loans

As of June 25, 2024, Vedanta and its subsidiary have a combined outstanding loan of Rs 17,470 crore. Vedanta’s largest loan is a Rs 8,000 crore term loan from Union Bank of India, with Rs 6,400 crore still outstanding. THLZV’s loans include a US Dollar Term Loan Facility from various lenders, including Oaktree, with repayments scheduled 24 and 30 months after the first utilisation date, and a final repayment due on the termination date.

This subsidiary borrowed Rs 7,470 crore in May 2023, repayable in instalments 24 months after the first utilisation date. Vedanta also borrowed Rs 1,100 crore from Deutsche Bank in May 2023, due for repayment 24 months after utilisation. Additionally, Vedanta raised Rs 2,500 crore through non-convertible debentures (NCDs) from Oaktree funds.

QIP

Vedanta increased the QIP size from Rs 6,685 crore to Rs 8,500 crore due to strong investor demand. The floor price was set at Rs 461.26 per share for this issue. The fundraising has attracted interest from insurance companies like HDFC Life and SBI Life, as well as WhiteOak. Citibank, JM Financial, and Nuvama are managing the deal. Vedanta Limited’s net debt stands at Rs 56,338 crore.

On the stock market, Vedanta shares fell 0.81% to Rs 455.7 on the BSE, while the benchmark index decreased by 0.06%.