Vedanta reportedly getting $2 billion from US-based hedge fund amid debt concerns

Vedanta's Chairman Anil Agarwal once went for a 100-kilometre, painful cycling trip with top bankers in England to secure funding after several rejections to get his firm listed in London. This grit for raising money has been put to the test, as Agarwal's holding company has a $7.7 billion debt pile which has raised concerns.

But months after insisting that his firm has enough resources to go debt-free, Anil Agarwal is on track to bag as much as $2 billion from US-based hedge fund Farallon Capital Management.

Paying higher rates to refinance debt

• Almost $900 million of this will reportedly be given against corporate guarantees of the Vedanta Limited, while the rest will be infused into promoter entities offshore.

• At this time, this structured funding being finalised will help Vedanta address immediate refinancing obligations but will come at a high rate of 16 per cent in dollar terms.

• The mining giant which has more than $1 billion in upcoming repayments, had also approached banks JP Morgan and Barclays for a loan, but their pricing higher by 300 basis points slowed down negotiations.

Debt affecting future projects?

• Vedanta had also made headlines last year, by clinching the deal for a $20 billion semiconductor plant in Gujarat, alongside Foxconn.

• But it has been reportedly struggling to find financing for the project, which will be partly funded by the government.

• Farallon Capital has been involved in the Indian corporate landscape, where its supports the likes of Piramal, Indiabulls, Shapoorji Pallonji Group, Essar and Emami among others.

• As Vedanta plans to cut down its debt from $7.7 billion to $4 billion in three years, it has already repaid half of it in FY23 alone.

• As per JP Morgan, Vedanta is struggling with a holding company level debt of $4.1 billion, while its $1 billion bond payment is due in January 2024.