Agarwal Plans to Keep His Anglo American Stake for a Long Time

(Bloomberg) -- Anil Agarwal, the Indian commodities billionaire, said the rally in Anglo American Plc vindicated his personal bet in the mining group, adding that he plans to own the shares for a long time.

Agarwal surprised Anglo’s management last year when he took a 21 percent stake in the company, becoming its top shareholder. The structure of the purchase, done via a mandatory exchange bond issued by a family company, effectively means he rents the shares until the bond matures in 2020.

He doesn’t benefit much from a rising stock price, leaving analysts to speculate that he might take an activist role in the blue-chip miner.

Yet, in an interview on the sidelines of the World Economic Forum in Davos, Switzerland, Agarwal said he was likely to remain a shareholder after the bond matures in two years, buying the shares.

"We are a long-term investor. It’s up to me to decide how long I extend" my investment, he said.

"Money isn’t a problem," he said when asked how he planned to finance the purchase of the shares.

Read: Mining’s Biggest Mystery Is What Agarwal Plans to Do With Anglo

To his critics, who questioned the timing of the acquisition nearly a year ago, he had a message: "I wasn’t wrong."

Anglo shares have rallied almost 40 percent over the past year as the price of copper and coal surged. Since hitting a bottom of 215.55 pence in January 2016, the lowest since the company’s initial public offering two decades ago, Anglo shares have surged to 1,792 pence.

Anglo, founded by the storied Oppenheimer dynasty in South Africa a century ago, is one of the world’s top five mining groups. Its key assets include De Beers, giant copper mines in Chile and iron ore operations in Brazil and South Africa.

Agarwal, who also owns Vedanta Resources Plc, reiterated that the Anglo investment remains separate, but left the door open to a change. "At the moment, it’s a personal investment," he said.

In 2016, Agarwal proposed a tie-up between Anglo and the zinc unit of Vedanta, and last year said the combination would have been a good match. With zinc prices at a 10-year high, he said a merger wasn’t the right strategy for now.

"Zinc is at the top of the pyramid," he said.

©2018 Bloomberg L.P.