It once looked like Anil Agarwal could shake up the mining industry by amassing the biggest stake in Anglo American Plc. But in the end the tycoon’s lack of financial firepower forced him to unwind his investment.
For two years, Agarwal kept insiders and Anglo executives guessing about why the billionaire decided to take a position in the London mining giant. The deal — structured in a complex way as to giving voting rights but not much exposure to the shares — seemed to make sense only if Agarwal planned to push for a major change, like a takeover or breakup.
In the end, he decided to do neither. On Thursday evening, Agarwal, one of India’s richest men, announced that he was exiting his investment because his returns were “achieved even sooner than expected,” according to a statement released by his holding company Volcan Investments Ltd.
Agarwal will likely make about $500 million from his investment and pocket between $200 million and $300 million after fees, according to people familiar with the matter who asked not to be identified. It’s a small gain considering Anglo shares had soared more than 80% since March 2017, when Agarwal first announced he would buy a stake.
“As Anglo American’s share price climbed, it became even more clear that Agarwal lacked the firepower to work an approach,” said Ben Davis, an analyst at Liberum Capital Markets. “He’s made far less than he would have done with a straight investment, though his bankers would have done well out of it.”
The billionaire maintained that his interest in Anglo was a family investment and he didn’t intend to make a takeover offer.
The biggest challenge Agarwal would have faced is the surge in Anglo’s share price since he bought his first tranche. His two listed ventures, Vedanta Ltd and Hindustan Zinc Ltd, slumped over the same period making any kind of merger hard to execute.
—Bloomberg
