Vedanta Limited to raise Rs 5,000 cr through NCDs

Vedanta Ltd., the Mumbai-listed metals conglomerate undergoing a revenue stream-wise demerger, will raise up to Rs 5,000 crore through a private placement of debt with top mutual funds, insurers and alternative investment funds (AIF), multiple people aware of the plans told ET.

The secured non-convertible debentures (NCDs), of two tenures, would comprise a base issue size of Rs 4,100 crore and a green shoe option, confirmed a spokesperson.

Vedanta is offering a coupon of around 9.35% for its 2.5-year NCDs and 9.45% for the 3-year tranche. India’s two-year and three-year sovereign bonds are currently trading in the 5.7-5.7250 range.

“The unsecured NCDs will have a base issue of Rs 4,100 crore along with a green shoe option that allows the company to raise up to a total of Rs. 5,000 crore,” said a Vedanta spokesperson.

Anchor investors in the issue includes ICICI Prudential Mutual Fund, Aditya Birla Sun Life Mutual Fund, Kotak Mahindra Mutual Fund, Axis Mutual Fund. Reliance General Insurance Company, Aseem Infrastructure Finance, and Alpha Alternatives Financial Services, said one of the sources cited above.

The issue is split into three series: Series I will raise Rs 2,250 crore with a green shoe of Rs 750 crore, Series II will raise Rs 1,000 crore with a green shoe of Rs 750 crore, and Series III will raise Rs 850 crore without any green shoe. The total issue across all three series will not exceed Rs 5,000 crore.Proceeds from the issuance will be used for general corporate purposes, including repayment or prepayment of existing debt and meeting capital expenditure requirements.Proceeds from the issuance will be used for general corporate purposes, including repayment or prepayment of existing debt and meeting capital expenditure requirements. The issue opens and closes on June 4.

The NCDs come with staggered maturities from 2.5 years to 3 years. Series I will mature on December 3, 2027, Series II on June 5, 2028, and Series III on June 4, 2027.

The issue also has coupon adjustments linked to credit rating changes. A downgrade in the issuer’s or instrument’s rating from AA to A+ or below will trigger a Step-Up Event, resulting in a higher coupon. An upgrade following such a downgrade qualifies as a Step-Down Event, which reduces the coupon. However, upgrades from A+ to AA- will not trigger a step-down.