Motives for Agarwal’s Anglo bid unclear

THE JURY is out on what the future holds for global diversified miner Anglo American, following an announcement by Indian billionaire, Anil Agarwal, that he planned to hold a 20 percent stake in the company.

Percy Takunda, a mining analyst at Momentum Securities, said yesterday that it was not clear what the reasons for Agarwal’s move were.

“It could be an opportunistic move or part of a longer term strategic investment. He probably will have at least a seat or representation on the board of Anglo and can influence the company’s strategy, but that is about it,” Takunda said. He also said that Anglo’s assets were from a valuation metric perspective comparably cheaper than other global peers in diversified mining.

Anglo owns Anglo American Platinum, the world’s biggest platinum producer; De Beers, the world’s biggest diamond producer by value; and Kumba Iron Ore, which resumed its dividend in July after it was halted in 2015 owing to low prices.

“The 20 percent stake is not going to give him outright control of Anglo,” said Takunda.

Seleho Tsatsi, an investment researcher at Anchor Capital, said the Agarwal family had stated that they did not intend to take over the company.

“Beyond it being a vote of confidence in the company and its mix of assets, it’s difficult to say what the motivation is. We can only speculate at this point” he said.

Agarwal, the founder and chairperson of Vedanta Resources, said on Wednesday that he planned to buy as much as R27 billion of Anglo, which had benefited from the recovery in commodity prices.

It was reported on Wednesday that Agarwal had said the purchase, which was the equivalent of about 9 percent, was a family investment and he did not intend to make a take-over offer for the company. It came on top of the 12.43 percent stake he had built since an announcement in March that his Vulcan unit was investing in the company.

Agarwal, who was set to become the largest shareholder ahead of the Public Investment Corporation after the purchase, offered to merge part of his mining empire with Anglo last year, only to be rebuffed.

“We are encouraged by the performance of Anglo American since our original investment earlier this year,” he said.

The company has made good progress in its operational and financial performance and remains an attractive investment for our family trust,” he said.

A spokesperson for Anglo declined to comment.

“Just like in March when he acquired his first interest, it would not be appropriate for us to comment,” he said.