Cairn India investment in Anglo American met all norms: Vedanta
New Delhi: Metals and mining giant Vedanta Ltd Monday said the investment by its overseas arm Cairn India Holdings Ltd in Anglo American Plc was made after meeting all governance requirements and protects the interests of shareholders.
The clarification follows the sharp decline in Vedanta shares last week after investors raised concerns about the said investment. Shares of mining giant Vedanta Friday had tumbled nearly 20 per cent.
"The investment now has full capital and downside protection to ensure that the interests of Vedanta Limited shareholders' are protected. The investment was made on an arm's length basis in December 2018, after meeting all governance requirements," Vedanta Ltd said in a regulatory filing to the BSE.
Cairn India Holdings Limited (CIHL), an overseas subsidiary of the Company, was offered the opportunity by Volcan to invest some of its surplus cash resources in a structured investment representing the economic interest in upside potential of 24.71 million shares (1.8 per cent) of outstanding shares) of AA Plc, it said.
It said the structure provides significantly higher returns compared to other overseas cash management investments that would typically return around 2 per cent.
"After careful consideration of the risk adjusted returns of this opportunity relative to other available investments, it elected to invest a portion (which is less than 5 per cent of Group's cash and cash equivalent of around $5 billion) of its available cash resources, as part of its cash management activity. The ownership of the underlying shares, and the associated voting interest remains with Volcan", it added.
The company said investment was done after valuation of the economic interest by an independent valuer and was duly approved by the boards of CIHL and Vedanta Ltd.
"This was voluntarily and transparently disclosed in the December quarter results," it said. The company said, it remains committed at all times to act in the interest of all shareholders and look forward to continued engagement with them. The company reiterated that the transaction with Volcan Investments Limited (Volcan) and Vedanta Resources Limited, the parent companies of Vedanta Limited, holding more than 50 per cent, have played a significant role in shaping and building Vedanta Limited businesses in a visionary and entrepreneurial manner.
Volcan owns a 21 per cent stake (voting interest) in Anglo American Plc (AA Plc).
AA Plc is a globally diversified mining business that comprises of the largest diamond producer De Beers, copper, platinum and other precious metals, iron ore, coal and nickel.