Industry News by Nemesis

HSBC Says Anglo Could Rake in $10b from De Beers IPO

November 27, 2015

HSBC Holdings said Anglo American could raise more than $10 billion by selling a part of its De Beers business.

 

The diversified mining company owns 85 percent of the diamond company and was currently the second-worst performer in the benchmark FTSE 100 this year, according to Bloomberg.

 

The bank was quoted as saying that Anglo would retain a stake after an initial public offering.
However, a full sale of its stake would fetch more than $10 billion, it said.

 

Anglo bought the Oppenheimer family’s 40 percent stake in De Beers for $5.1 billion in 2012. 
 

“De Beers would likely attract a premium valuation,” HSBC was quoted as saying in a note to investors.

 

“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 raised $2 billion this year by selling Chile copper mines and platinum business in South Africa, was seeking to raise $3 billion.

 

This would be done through the selling of assets and cutting jobs to reduce costs and debt. 
Bloomberg reports that De Beers had been one of Anglo’s best-performing businesses, accounting for more than one-third of the group’s first-half underlying earnings.

 

However, the diamond market had been on a downward trajectory since late last year due to a liquidity crisis, strengthening US dollar and sluggish Chinese economy.

 

De Beers’ November sight, said to be the smallest this year, raked in about $70 million for the group early this month down from last month’s estimated value of $200 million.

 

“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.

 

Source: Rough & Polished

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