InvestorQ : If Vedanta delisting had happened, would it have counted as FDI into India?
diksha shah made post

If Vedanta delisting had happened, would it have counted as FDI into India?

Answer
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2 weeks ago


The reality is that the delisting of Vedanta would have actually been classified as FDI into India and shown as infusing $3.15 billion into India. In fact, the failure of Vedanta delisting offer has raised questions about the FDI tag for such transactions and lack of transparency.

It may be recollected that the delisting attempt of Vedanta had failed since their largest minority shareholder, LIC, had demanded a price of Rs.320 per share compared to Rs.140 that Vedanta was will to offer in a best case scenario. This led to the delisting offer failing.

Due to the refusal of LIC the Vedanta delisting offer managed to only muster 125 crore shares against the minimum required 134 crore shares. While there appears to be a gap in communication, transparency has surely been the casualty in the process.

The delisting offer was sold to the policy makers under the pretext that it would result in FDI flows of $3.15 billion into India. While technically this is FDI, it does not result in any fresh investment. On the contrary, it does deprive shareholders of ownership at low prices.