ANIL Agarwal, the chairman of Indian firm, Vedanta, is to lift his personal stake in Anglo American by buying between £1.25bn to £1.5bn worth of shares in the UK-listed group.
The investment will be through Agarwal’s family trust, Volcan Investments, the vehicle used in March this year when he swooped on £2bn in Anglo shares – a move interpreted at the time as the beginning of an Anglo takeover.
Today, as back in March, Agarwal said there was no intention to make an offer for the balance of Anglo shares. Prior to the new offer, Volcan has voting rights in Anglo of 12.43%. The precise stake that Volcan would control in Anglo after this latest transaction will only be made on its conclusion. Assuming it bought the full allotment at Anglo’s current price, however, Volcan would gain a one fifth stake in the firm including its existing shares.
Vedanta said in a separate announcement that the “… investment is being made by Volcan alone, and that the company is not participating in this investment”.
The purchase mechanism is as before with Volcan buying shares through a combination of market purchases from investors in Anglo and through a mandatory exchangeable bond on or around October 10 and which will be secured with Anglo shares. The first mandatory exchangeable bond expires in two-and-half years, but it’s understood that Volcan will have the option of either redeeming the stake in cash or keeping the shares.
Said Agarwal: “We are encouraged by the performance of Anglo American since our original investment earlier this year. The company has made good progress in its operational and financial performance and remains an attractive investment for our family trust”.
Anglo American cemented its recovery in July after a sometimes excruciating two-year restructuring exercise by resuming the dividend and installing a policy of paying out 40% of earnings which in the half-year to June 30 equated to 48 US cents per share.
At the time of Agarwal’s first purchase of Anglo shares, analysts believed it might be an attempt to flush out rival bidders for Anglo’s assets or buy the South African assets identified by CEO, Mark Cutifani, as non-core. That was at a time when Anglo was in the throes of restructuring, some of which it has decided will not proceed.
The transaction had not been discussed with Cutifani as would be the case had any investor bought shares in Anglo American.
