Proxy Advisory Firms Back Vedanta’s Demerger Ahead of Key Shareholder Vote Starting Feb. 13

•  Leading Indian and international proxy firms have supported the demerger, recommending that shareholders vote in favor of the proposals.
• Shareholders & creditors will electronically vote on the proposed resolutions between February 13 and 17.
• Meetings of Vedanta’s shareholders and secured and unsecured creditors will be held on Feb. 18.

Vedanta’s demerger received another endorsement as five leading proxy advisory firms issued reports recommending shareholders vote in favor of the company’s proposed demerger, which would eventually create five separate listed entities. The voting process for shareholders and creditors will occur electronically from Feb. 13 to Feb. 17, ahead of the respective meetings scheduled for Feb.18.

Proxy advisors that have issued the reports include US-based Institutional Shareholder Services Inc (ISS), Glass Lewis, along with Indian firms Institutional Investor Advisory Services (IiAS), InGovern and Stakeholder Empowerment Services (SES).

The demerger will eventually result in five listed entities: Vedanta Aluminium, Vedanta Oil & Gas, Vedanta Power, and Vedanta Iron & Steel, while certain existing and upcoming businesses will remain under Vedanta Ltd. The demerger will likely be completed by July.

Acknowledging Vedanta’s rationale that the demerger will help create independent global-scale companies, US-based ISS noted that Vedanta’s existing shareholders will get shares in each of the newly listed entities, resulting in no dilution. It said, “Shareholders of the company would continue to participate in the growth prospects of the four businesses through their direct equity interest upon completion of the scheme. The shareholding of [the resulting four companies] each will mirror the shareholding of the company. Each of these companies will eventually get listed on the two stock exchanges [NSE & BSE]. Given the above considerations and the sound strategic rationale behind the demerger…. this resolution warrants shareholder support.”

Proxy advisor Glass Lewis said in its report that the one-to-one share exchange ratio ensures that shareholders will not experience any adverse economic effects from the eventual listing of the demerged entities. It also added that Vedanta’s management and the board are in the best position to determine what operational decisions are best in the context of the company’s business.

InGovern expects Vedanta’s minority shareholders to benefit as existing shareholders will get shares in the demerged entities. “Minority shareholders will effectively increase their total number of shares across multiple entities, potentially enhancing their overall investment value as these companies grow independently,” InGovern said in its report. “Given the clean swap of shares, which is beneficial for the minority shareholders as well as for the growth of all the companies, we recommend shareholders vote FOR this scheme of arrangement,” it added.

SES, too, observed in its report that the proposed valuation and overall distribution under the demerger is fair. “Effectively, pursuant to the demerger, these resulting companies shall create a mirror image of Vedanta’s shareholding pattern since all of them are wholly-owned subsidiaries of the company and subsequently its shares shall be publicly listed. Additionally, the company has adequately justified the rationale for the Scheme.  Therefore, no concern is identified with respect to the proposed scheme for demerger,” it said.

Mumbai-based Institutional Investor Advisory Services (IiAS) also backed the demerger. As per IiAS, the proposed scheme of arrangement will result in unlocking the value of the four resulting companies. “The shares of the [four] resulting companies…. will be listed on the stock exchanges with mirror shareholding. Therefore, the economic interest of shareholders remains unchanged. Hence, we support the transaction,” the firm said in its report.

Brokerages are also bullish on Vedanta’s demerger. In its recent report on Jan. 31, Nuvama maintained a “Buy” rating on Vedanta with a target price of INR 663. “We expect demerger of the business to be likely conclude by end-Q1FY26 as Vedanta seeks lenders’ and equity shareholders’ approval on 18th Feb 25,” it said.