Remember Gwede Mantashe lambasting Anglo American for having “stolen our money”? This was t he comment Mantashe made in an SAfm radio interview earlier this year, adding: “They are a British company now,” an explanation as to why Anglo American’s subsidiary, Anglo American Platinum (Amplats), could propose retrenching 14 000 workers without any apparent show of sympathy.
As it turned out, Amplats is to retrench 3 000 employees, but there are also grounds for reviewing the comment that Anglo is “a British company”.
Since the end of 2009, a decade after Anglo ‘migrated’ to the UK in a listing aimed at lowering its cost of capital, South African shareholders in Anglo American have been steadily rising.
At the current rate of growth in the SA shareholder base, Anglo now stands at more than 50% locally-owned from about 35% at its low in mid-2009. It’s a shift that could be construed as a homecoming.
And it’s not the only company where SA shareholders have been piling in.
As shown in the graph below, the UKheadquartered platinum producer, Lonmin, is now nearly 50% owned by SA shareholders, from less than 5% of the total shareholder base in 2009.
In the case of Aquarius Platinum, one of the first to adopt the dual-listing share structure on offer from the JSE, it has seen local investors scoop up 30% of the share register from the end of 2011.
The shift in shareholdings comes as international investors quit SA amid industrial and social strife, poor mining economics, and to a lesser or greater extent – c ompany depend i ng – u nderperformance. South Africans, meanwhile, understand (or are less risk averse) to what’s been going on at the local operations.
Capitalising on geo-political risk, may also make for some good investing, especially if you believe the mining markets are not fundamentally harmed, just correcting.
From February 2011, the time when the number of SA shareholders in Lonmin started to increase dramatically, the share lost over two-thirds of its value from R102/ share to R31/share. It has since recovered to R53.80/share so perhaps some local investors bought as Lonmin bottomed out.
The same might be said for Aquarius Platinum, which lost R18/share from December 2011 to June 2011, roughly over the same time that the SA shareholder base started to rise. It is now trading at R8.18/ share. Perhaps there are benefits from local domain knowledge.
The willingness of South Africans to invest in their own stocks was grasped as an interesting marketing opportunity by GlencoreXstrata, which is expected to take a secondary listing on the JSE in
SA shareholding the last quarter of this year. Are there other companies with operations within SA, but not listed here, seeking to mine the captive SA audience, which doesn’t have the geopolitical collywobbles of its international brethren? IvanPlats, a Toronto-listed platinum development firm is one.
Adrian Saville, of Cannon Asset Management, says the observation is interesting, but wonders if foreign shareholders of miners operating in SA are just “capturing collective foreign sentiment”.
One of the companies not considering a homecoming is Petra Diamonds. Almost all of the diamond firm’s operations are in SA, having bought them from De Beers, but the company has largely stuck to a UK listing.
Johan Dippenaar, CEO of Petra Diamonds says: “We had a dual listing in Australia, but it was hard work, especially with the time shifts. We wouldn’t have that problem in SA, but we have a very strong shareholder base in the UK.
“It’s [an SA listing] not something we’re considering at the moment.”
Meanwhile, some companies have chosen to quit foreign climes altogether, such as Petmin, which is ending its London listing, while Sappi is delisting its ADRs from the New York Stock Exchange, giving low trading volumes there.