Share

De Beers IPO could fetch $10bn for Anglo

London - Anglo American [JSE:AGL], the second-worst performer in the benchmark FTSE 100 this year, could raise more than $10bn by selling its De Beers diamond business, according to HSBC Holdings.

“De Beers would likely attract a premium valuation,” HSBC said in a note to investors Wednesday. “A partial sale through IPO could be, under the right market conditions, a powerful price-discovery mechanism in addition to being significant cash boost.”

Anglo, which owns 85% of De Beers, is seeking to raise $3bn by selling assets and cutting jobs to trim costs and reduce debt.

Anglo has already raised about $2bn this year by offloading its tarmac business, two copper mines in Chile and platinum assets in South Africa.

This comes after a China-led collapse in commodity prices undermined Chief Executive Officer Mark Cutifani’s efforts to turn around the fortunes of a business that mines everything from platinum in Africa to iron ore in Brazil.

De Beers has been one of Anglo’s best-performing businesses, with the world’s biggest diamond producer accounting for more than one-third of the company’s first-half underlying earnings.

The situation has since soured as cooling demand in China, the largest market after the US, and an industry credit crunch have sapped demand for the gems and prices about 15% this year.

An Anglo spokesperson could not immediately be reached for comment.

“Today’s market appetite is low, and we think Anglo is likely to wait for a cyclical recovery before realistically considering a separation,” HSBC said.

The bank said that while it would expect Anglo to retain a stake after an initial public offering, a full sale of its stake would fetch more than $10bn.

Anglo bought the Oppenheimer family’s 40% stake in De Beers for $5.1bn in 2012, increasing its holding to 85% and ending the dynasty’s 80-year ownership.

The southern African nation of Botswana controls the rest of the business, founded by the British imperialist Cecil Rhodes.

We live in a world where facts and fiction get blurred
Who we choose to trust can have a profound impact on our lives. Join thousands of devoted South Africans who look to News24 to bring them news they can trust every day. As we celebrate 25 years, become a News24 subscriber as we strive to keep you informed, inspired and empowered.
Join News24 today
heading
description
username
Show Comments ()
Voting Booth
Do you think corruption-accused National Assembly Speaker Nosiviwe Mapisa-Nqakula will survive a motion of no confidence against her?
Please select an option Oops! Something went wrong, please try again later.
Results
No, her days are numbered
42% - 397 votes
Yes, the ANC caucus will protect her
58% - 558 votes
Vote
Rand - Dollar
18.94
-0.2%
Rand - Pound
23.91
-0.1%
Rand - Euro
20.43
+0.2%
Rand - Aus dollar
12.34
+0.1%
Rand - Yen
0.13
-0.2%
Platinum
910.50
+1.5%
Palladium
1,011.50
+1.0%
Gold
2,221.35
+1.2%
Silver
24.87
+0.9%
Brent Crude
86.09
-0.2%
Top 40
68,346
+1.0%
All Share
74,536
+0.8%
Resource 10
57,251
+2.8%
Industrial 25
103,936
+0.6%
Financial 15
16,502
-0.1%
All JSE data delayed by at least 15 minutes Iress logo
Editorial feedback and complaints

Contact the public editor with feedback for our journalists, complaints, queries or suggestions about articles on News24.

LEARN MORE