MUMBAI: Natural resources major Vedanta has clarified on Monday that Cairn’s investment in Anglo American met all governance standards and was made on an arm’s length basis and had been valued by an independent valuer and approved by boards of both Cairn India and Vedanta.
“The investment was made on an arm’s length basis in December 2018, after meeting all governance requirements. The economic interest was valued by an independent valuer and approved by the boards of CIHL and Vedanta Ltd,” Vedanta said in a statement on Monday adding that this was “voluntarily and transparently” disclosed in the December quarter results.
Vedanta’s share price fell to a 52-week low, falling by 20% on Friday as investors grew jittery over Vedanta’s subsidiary Cairn India Holdings’ purchase of a stake amounting to $200 million (Rs 1,431 crore) in Anglo American Plc from Volcan Investments, a family trust of Anil Agarwal.
“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% of outstanding shares) of AA Plc,” the company said in the statement.
“The structure provides significantly higher returns compared to other overseas cash management investments that would typically return around 2%. 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% of Group’s cash and cash equivalent of around US$5.0bn) 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 said.
Volcan Investments, a family trust of Vedanta promoter Anil Agarwal, holds around 19% in Anglo American. Cairn India is a subsidiary of Vedanta.