In the stock news today, one of the most significant shareholders in Anglo American Plc, Indian billionaire Anil Agarwal, thinks of exiting his stake in the diversified mining company.
Volcan Investments, an Agarwal’s holding company, will reduce the position by calling a transferrable bond. It is a part of an unusual building that efficiently gave him the shares on loan.
An offshore unit of Vedanta Ltd, Cairn India Holdings, said separately that it ended a structured investment in Anglo.
This was also agreed by Volcan in December that achieved an increase of about $100 million in the eight-month period after it was held.
According to familiar people with the matter, Agarwal will probably make about $500 million from his investment. The other $200 million and $300 million after-fee will be kept.
Since March 2017, when Agarwal publicized his intentions, a slight gain occurred considering Anglo shares climbed more than 80%.
Meanwhile, Anglo declined as much as 5.1% and traded 4.5% lower in London.
Ever since Agarwal created his surprise stake, the future of Anglo American, one of the most iconic names in mining, has been on examination.
Analysts have figured out the plans of breaking up or merging with Anglo. Some of the best copper, diamond, and platinum mines in the world are also in the hands of Anglo.
But the market moved versus Agarwal, doing any future plans more difficult.
The billionaire defended that his interest in Anglo was a family investment. He also defended that he did not intend to make a takeover proposal as reported on stock news today.
Even so, the structure used to control the Anglo investment was not usual because it promised Agarwal voting rights and minimal contact to the stock price.
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An analyst at Liberum Capital Markets, Ben Davis said, “As Anglo American’s share price climbed, it became even more clear. Agarwal lacked the firepower to achieve an approach.”
He also added, “He’s made far less than he would have done with a straight investment, but his bankers would have done well out of it.”
The biggest challenge Agarwal would have handled is the increase in Anglo’s share price since he bought his first portion.
His two known ventures, Vedanta Ltd. and Hindustan Zinc Ltd. plunged over the same period making any kind of union hard to accomplish.
At the same time, in the stock news today, alleged links such as South Africa’s Public Investment Corp. looked less associated.
Meanwhile, through a mandatory exchangeable bond issued by Volcan and secured by Anglo shares, Agarwal combined his stake.
The bonds were dispensed in March and September 2017 and financed the 3.5 billion-pound ($4.4 billion) investment.
On Thursday, according to a statement released, Volcan now plans to call the exchangeable bond. It means investors who maintained the Volcan bond will receive Anglo shares.
RBC Capital Markets stated that in the coming days, the mining company could see higher trading measures. The new Anglo shareholders will also close out the short positions they used as a barrier.
An analyst at RBC, Tyler Broda, said, “The unwind of this structure will remove, in our view. Any tangible potential for Volcan to pursue a large-scale corporate activity with Anglo American going forward,”
In addition, he stated, “We would not expect any fundamental derating in Anglo American on the back of this adventurous bond coming to an end.”
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