Anil Agarwal to buy stake worth $2.4 billion in Anglo American

Source: The Hitavada      Date: 17 Mar 2017 10:14:45


Mar 16,


MINING billionaire Anil Agarwal plans to buy stake in South Africa’s Anglo American Plc for upto 2 billion pounds (USD 2.4 billion) to gain a foothold in diamond mining business. Anglo is the owner of the De Beers, the world’s leading diamond exploration, mining and marketing company, producing over 30 million carats of diamonds per annum, 35 per cent of global rough diamonds production.

“Volcan Investments Ltd announces that it intends to make an investment in Anglo American Plc shares of upto 2 billion pounds,” the company announced late last night. Volcan is a holding company, wholly-owned by the Agarwal family trust, and this is a personal investment by Vedanta Resources Group Chairman, Anil Agarwal.

According to industry estimates, the investment will give Agarwal about 12-13 per cent stake in Anglo, making him the second-largest shareholder after South Africa’s Public Investment Corp.
The stake purchase announcement comes nearly a year after Agarwal’s plans to merge his mining business with Anglo was rejected. Agarwal said the purchase being made now was a family investment and he wound not make a takeover bid. Commenting on the investment Agarwal said: “This is an attractive investment for our family trust. Anglo American Plc is a great company with excellent assets and a strong board and management team who are
executing a focused strategy to drive shareholder value. I am delighted to become a shareholder in Anglo American Plc.”

The diamonds sold by De Beers to its clients trickles down to the secondary market in Surat and Mumbai, where they are sold to small and medium diamantaires and even big companies.
India is the largest consumer of rough diamonds in the world.

Vedanta Resources, in a separate filing, said the company confirms that the proposed investment is being made by Volcan alone, and that the company is not participating in Volcan’s investment.

“Vedanta is committed to its strategic priorities, including ramping up production from its portfolio of low cost assets, increasing its free cash flow, and continuing to optimise and deleverage its balance sheet,” it said. Agarwal had approached Anglo American for potential merger with Hindustan Zinc in 2016 but Anglo had rejected this proposal. Agarwal has a majority stake in Hindustan Zinc through Vedanta. “Volcan intends to finance investment in Anglo American shares through issuance by Volcan Holdings Plc, a wholly-owned subsidiary of Volcan, of a mandatory exchangeable bond, led by J P Morgan as Sole Bookrunner, on or around 11 April 2017 that will be secured by Anglo American shares,” Volcan had said yesterday.