Indian entrepreneur Anil Agarwal is set to complete his emigration to the UK by moving his business interests from Bombay to the London stock exchange.
Agarwal has pooled his collection of non-ferrous metal businesses into a new listing vehicle, Vedanta Industries, and has launched an IPO in London, becoming the first large Indian business to go for a listing in the UK. The company plans to raise $700 million through an offer of 30% to 40% of its equity capital to investors.
The deal launched Thursday and is expected to close in the first half of December this year. HSBC and JPMorgan are acting as joint global coordinators of the IPO.
Most of the companies controlled by Vedanta were acquired by Agarwal through India's privatization programme. The main business is Sterlite Industries, India's second-largest copper producer, which owns operations in India and Australia. Vedanta will own 60.8% of Sterlite, but plans to buy back as much of the share capital as regulators allow and delist from the Bombay stock exchange. It has also proposed an exchange offer to allow minority shareholders to transfer their interests into Vedanta shares.
Other key holdings include an 80% interest in Madras Aluminium, a 51% stake in Bharat Aluminium and 46% of Hinustan Zinc's shares. After completion of a call option exercised by Sterlite in August Vedanta will, in effect, control about 65% of Hindustan Zinc.
London is home to some of the world's biggest players in the mining industry, including Anglo American, Rio Tinto and BHP Billiton. Xstrata, Antofagasta and Lonmin, however, are more comparable counters to Vedanta.
Mining stocks, along with a host of other commodities, have performed well in recent days on the back of surging confidence in China's demand for raw materials and in expectation of a recovery in the US. Xstrata recently hit a year high and Antofagasta hit an all-time high that may lead to its inclusion in the FTSE 100.
The commodities themselves are doing similarly well: copper is approaching a six-year high on the London metals exchange and the last time aluminium and zinc were at comparable highs was March 2001.
