Anglo American rallies as billionaire Agarwal moves to up his stake
Shares in Anglo American rallied on Thursday after Volcan Investments, the holding vehicle of Indian billionaire Anil Agarwal, announced its intention to up its stake in the company.
Anglo American
2,540.00p
09:15 26/04/24
FTSE 100
8,117.08
09:15 26/04/24
FTSE 350
4,458.62
09:15 26/04/24
FTSE All-Share
4,411.92
09:15 26/04/24
Mining
10,561.11
09:14 26/04/24
Volcan - which controls 69% of Vedanta Resources - said on Wednesday that it intends to make a further investment in Anglo shares of £1.25bn to £1.5bn, in addition to its current 12.4% interest. This would lift Volcan's stake to just over 21%.
The purchase will be funded through the issuance of a mandatory exchangeable bond, to be completed by 10 October, secured against Agarwal's stake in Vedanta.
Agarwal said in a statement: "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."
Volcan confirmed that it has no intention to make an offer to acquire Anglo.
RBC Capital Markets said this investment will bring Agarwal to a position where he will be able to have a material say on any corporate evolution, as well as having a very concentrated bet on commodity upside and/or Anglo re-rating upside.
Analyst Tyler Broda said: "We recently spent a day with Anglo American and this reinforced our view on the compelling value story within the equity. Obviously, this investment should be seen to support this view, but we see this value story having been significantly enhanced by the recent deleveraging, which opens up optionality on the international balance sheet and hence strategic options.
"It remains to be seen if there are further ambitions from Volcan, but if anything we believe this should help to support to upside case and potentially accelerate a corporate restructuring. We continue to favour Anglo American amongst the London diversified miners."
At 1040 BST, Anglo shares were up 2.9% to 1,331p.