Aviva Investors, a subsidiary of insurance firm Aviva Plc, has said it is amongst a number of minority shareholders who plan to reject the Cairn India-Vedanta merger.

“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,” the company said in a note released late on Wednesday in London.

Aviva Investors owns a 4.3 per cent stake in Cairn Energy Plc, the largest minority shareholder in Cairn India with 9.82 per cent equity. Aviva Investors’ Emerging Market Equity teams in London and India are shareholders in Cairn India also. “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. 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 value currently ascribed to its assets by the equity market,” the note added.

Aviva Investors also expressed concern over the risk that the Vedanta Group would “misallocate” capital if the merger is successful. “With high levels of debt and an aggressive capital expenditure programme, we fear that the Vedanta Group would prioritise its immediate needs over the long-term potential we believe that exists at Cairn India,” Aviva Investors said.

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