Opposing Vedanta's all-share merger deal, Aviva said there was 'a risk of the Vedanta Group misallocating capital' of oil producer Cairn India to pay off its huge debt. Aviva holds 4.3 percent stake in Edinburgh-based Cairn Energy plc, the original owner of Cairn India and still its largest minority shareholder. Its emerging market equity teams both own stakes in Cairn India.

"As long-term investors, we believe that the timing of this deal is opportunistic and materially undervalues Cairn India, its current reserves and future prospects Aviva Investors, part of insurer Aviva Plc," said in a statement.

Aviva Investors, the statement said, was opposed to the recently announced offer by majority shareholder Vedanta Ltd – the Mumbai-based subsidiary of London-listed mining group Vedanta Resources – to buy out minority shareholders in Cairn India. "In its current structure, the deal fails to deliver value to minority shareholders, as such we don't believe it's in the interests of minority investors in either Cairn India or Cairn Energy," it added.

Aviva Investors said the 'combination of a depressed global oil price, ongoing tax litigation and uncertainty over the long-term ownership structure of Cairn India have all contributed" to the low share price.

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