Anil Agarwal ends dalliance with Anglo claiming investment mission accomplished

Anil Agarwal, executive chairman, Vedanta

ANIL Agarwal, executive chairman of Vedanta Resources, is to sell his 19.3% stake in Anglo American bringing to an end more than two years of speculation he was trying to engineer a deal with the UK company.

Agarwal’s investment vehicle for the Anglo stake, Volcan Investments, had achieved its targeted returns, said Reuters citing a statement by Agarwal. Anglo’s share price is more than four times its value since Volcan took its first tranche of shares in March 2017.

Agarwal’s announcement comes on the day Anglo published a strong set of interim results, an increased dividend, and $1bn in share buy-backs. Analysts rated Anglo among their top pick of the diversified mining group owing to its technical advances and commodity mix.

Agarwal began buying into Anglo American through a JPMorgan mandatory convertible bond in March 2017 and announced he was buying a second tranche in September 2017, taking his holding in the mining group to a total of 19.3%, said Reuters.

The bonds financed a £3.5bn investment by Volcan, Agarwal’s family trust. After paying back the loan, Agarwal is left with a 1.9% stake in Anglo, which he is selling on the open market, said Reuters quoting unnamed industry sources.

He would have had to make a decision in 2020 on whether to buy the shares or seek to roll over the arrangement, which is effectively a loan, they said.

During the period of holding the stake in Anglo, Agarwal was largely supportive of Anglo: he applauded its decision to stick with its southern African assets.

More lately, however, Agarwal struck the shareholder activist note voting against a proposal on May 1 at Anglo’s annual general meeting to appoint Brazilian, Marcelo Bastos, to the board. Agarwal said Anglo needed more representatives from South Africa in order to mirror where the group’s important assets were located.

Earlier this week, Anglo American appointed two South African women to its board – Hixonia Nyasulu and Nonkululeo Nyambezi – and redeployed another, Nolitha Fakude, to its South African unit where she will be chairwoman.

Agarwal’s dream of joint ventures with Anglo in Africa and even India, from which he hails, have also been diverted by problems at Vedanta. The company is battling the Zambian government which wants to wind-up Konkola Copper Mines, a entity through which some $3bn has been invested.