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