Anglo still favours De Beers sale, IPO option could include JSE primary listing

Daily Maverick

3 days ago

The format and timelines of Anglo American's disposal of De Beers remain up in the air, underscoring the arduous nature of offloading the asset at a time when the once-glittering diamond industry is fast losing its shine.
Anglo CEO Duncan Duncan Wanblad provided an update on the slow-motion De Beers disposal on Thursday when the company unveiled its interim results, saying that a trade sale was still the preferred option but an initial public offering (IPO) remained a possibility.
The company is preparing for one or the other – a 'dual track' approach – against the backdrop of a prolonged rough patch in the natural diamond sector, which faces an existential crisis from lab-grown gems and shifting consumer patterns.
'Our preferred exit route is still via a trade sale. We certainly have a fair amount of very credible interest in the business, it is of course one of the world's most iconic brands and it's still a business that consists of some fantastic assets,' Wanblad said on a conference call with journalists.
Wanblad acknowledged the 'current turmoil in diamond markets' but said Anglo's view was that the bottom of that cycle had been reached.
'If that (a trade sale) doesn't come together, we have to keep the options open for the dual track and therefore work is carrying on in parallel with setting up the business for an IPO at the right time,' he said.
On that front, Wanblad said Anglo was still considering the best home for a primary listing, with three main contenders: London, Johannesburg or New York.
'It's a very special business and I think it would attract an enormous amount of interest from the right types of shareholders, and it's important for us to get that right,' he said.
In terms of the timeline, Wanblad said that if the right buyer was found for a trade sale 'it would not be impossible to have this done in the next six to nine months'. For the IPO, the timing would hinge on 'some visible strength coming back to the market'.
So, the format and timelines of Anglo's disposal of De Beers remain up in the air, underscoring the arduous nature of offloading the asset at a time when the once-glittering diamond industry is fast losing its shine.
What this means
A De Beers IPO with a primary listing in Johannesburg could add some sparkle to the sagging listings fortunes of the JSE – unless it turns out to be a damp squib. For Anglo, it remains a costly and time-consuming distraction from its pivot to a few key commodities. And for Botswana, the stakes are sky high. Long regarded as an African success story with a stable state and investment-grade ratings, its fortunes are sinking in tandem with diamonds – highlighting the dangers of dependence on a single commodity. The resource curse that has long bedevilled oil-producing African nations such as Angola is now casting its spell on Botswana.
It must be said that a 'dual track' approach is costly – lawyers and investment bankers don't come cheap, and the fact that both a sale and IPO remain in play highlights the uncertainty of how all of this will play out.
De Beers remains a drain and the poor diamond market accounted for a $500-million hit on Anglo's interim earnings, which were disappointing with a 55% fall in earnings per share.
The bottom line: it is not a great time for either a sale or an IPO for the world's most famous diamond brand.
'Diamond prices remain stuck at low levels and have not shown signs of recovery,' Brendon Verster, an economist at Oxford Economics, noted in a recent commentary.
De Beers' latest production report showed that diamond output in southern Africa cratered more than 33% in the second quarter of this year compared with the previous three months.
Among other things, this bodes ill for the lacklustre economy of Botswana, which has expressed interest in upping its 15% share in De Beers to a controlling stake.
Wanblad said on Thursday that Anglo was in talks with De Beers about increasing its stake but the country would not get a discount.
And Botswana's deteriorating financial situation raises questions about its ability to finance such a transaction, which would be questionable: its economy is sinking with diamond prices and so it seems like a case of the country wanting to buy the anchor that is dragging it down into the abyss.
'Global diamond price conditions remain gloomy, with the impact being most pronounced in Botswana. The landlocked economy is running the risk of contracting again this year, with the Q1 GDP figures not inspiring any confidence,' Verster of Oxford Economics said in his research note.
'Given the ongoing diamond market woes, FX reserves have taken strain, dipping from $4.4bn in May 2024 to $3.1bn in May 2025.'
One route for Botswana could be the debt markets. Unlike, say, South Africa, it has a coveted credit rating that is well above investment grade. But Moody's and S&P are expected to downgrade Botswana, though not below investment grade.
In a much smoother process, Anglo recently demerged its platinum unit which now trades as Valterra Platinum – a launch that comes as platinum group metals are on the rebound.
Will diamond prices rebound? Aside from the challenge presented by the lab-grown versions, consumers, for a range of reasons, are just no longer as drawn to the sparkle of diamonds as they once were. It all points to a potential fire sale or a possible flop of an IPO. DM