The self-made billionaire and one of India’s richest men, Anil Agarwal has sold his stake in Anglo America. As the biggest shareholder of the mining company, Agarwal is reported to have made US$500M before the costs from the deal. 

Agarwal, through his metals company, Volcan Holdings Plc, began buying into Anglo American through a JPMorgan mandatory convertible bond in 2017.On 25 July 2019, Agarwal said in a statement that the targeted returns had been achieved “even sooner than expected” and Anglo American’s share price had nearly doubled since he began his investment.

The costs, however, are substantial. not only did the Agarwal pay fees to JPMorgan, but he also had to fund the interest payments on the bonds, which financed the bet. Those coupon costs alone will have totalled about $300m since he first put on the two legs of the trade. The bonds he used to fund the bet were issued in March and September 2017 and effectively gave Volcan, Agarwal’s family trust, a 20 per cent stake in Anglo, fuelling speculation that he was plotting a bid.

The bonds financed a £3.5bn investment by Volcan. Agarwal, who is also Chairman of Vedanta Resources, has always said the stake was an investment, based on his belief in Anglo as a company, for his family trust. Agarwal, who is also a majority shareholder in Vedanta and through Volcan, often using debt amassed a fortune by acquiring neglected mining assets from the Indian government and ‘transforming’ their operations.

The billionaire’s ultimate dream is to build an Indian version of BHP, the world’s biggest natural resources group. In 2016, he had tried to merge Hindustan Zinc, another of his companies, with Anglo, which at the time was struggling to service a large debt load. Since the first bond was completed, shares in Anglo have risen more than 80 per cent and the company is now valued at almost $40bn. They were due to mature next year but Agarwal has now decided to exercise a call option and take profits on his investment.