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Indian mining billionaire set to overtake PIC as Anglo's biggest shareholder

Sep 21 2017 07:22
Ruth David, Bloomberg

Anglo American CEO Mark Cutifani.

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London - Anil Agarwal, an Indian mining billionaire, plans to purchase as much as R27bn worth of additional Anglo American [JSE:AGL] shares, increasing his stake in the blue-chip British miner that’s benefited from a recovery in commodity prices.

Agarwal said on Wednesday the purchase, which is the equivalent of about 9%, was a family investment and he doesn’t intend to make a takeover offer for the company, according to a statement. It comes on top of the 12.43% stake he’s built since an announcement in March that his Volcan unit was investing in the company.

The Indian tycoon, who is set to become the largest shareholder ahead of South Africa’s Public Investment Corporation after the purchase, offered to merge part of his mining empire with Anglo American last year, only to be rebuffed. The London-based mining group has been seen as a candidate for a potential breakup through splitting some of its South African assets from the global mining business.

"We are encouraged by the performance of Anglo American since our original investment earlier this year," he said in the statement. "The company has made good progress in its operational and financial performance and remains an attractive investment for our family trust."

Anglo’s American depository receipts rose as much as 9% to $9.60 and traded up 8.4% at 12:04 in New York.

The purchase will be funded by a mandatory exchangeable bond issued by his family holding company on or around October 10 and secured by Anglo shares. JPMorgan Chase, which advised on the previous purchase, is the sole bookrunner on the transaction. The exchangeable is due in 2020.

A spokesperson for Anglo American declined to comment.

Anglo American’s shares slumped to a record low in London in early 2016 as weak metal prices focused attention on its debt position. Chief executive officer Mark Cutifani announced a plan to radically shrink the company through asset sales, but reversed the strategy early this year after recovering commodity markets revived profits.

Since then the company has returned with a renewed sense of ambition, surprising investors with an interim dividend and promise to grow. Debt, which brought Anglo to its knees during the crisis of 2015, has been almost cut in half over the past year, and is already below its year-end target of $7bn.

Anglo American, a company founded by the storied Oppenheimer dynasty in South Africa a century ago, is one of the world’s top five mining groups, alongside BHP Billiton, Rio Tinto Group, Vale and Glencore. Its key assets include copper mines in Chile, iron ore operations in Brazil and South Africa as well as De Beers, the iconic diamond producer.

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