China Shenhua Energy Company

Anglo American offers Shenhua stake for sale

PUBLISHED : Tuesday, 29 April, 2008, 12:00am
UPDATED : Tuesday, 29 April, 2008, 12:00am

Anglo American, the world's second-largest mining company, yesterday tried to sell its entire stake in China Shenhua Energy for as much as HK$5.63 billion through a share placement to end its shareholding relationship with the coal giant, market sources said.

The South African-based mining firm was selling 155.612 million Shenhua Energy shares at HK$35.46 to HK$36.19 each, a discount of up to 5.94 per cent to the stock's close of HK$37.70 yesterday, said a sale document obtained by institutional investors from UBS, the sole arranger.

The placement represents 4.58 per cent of Shenhua Energy's existing share capital.

Anglo American would reap a return of at least 3.8 times its investment of US$150 million, made when the mainland's largest coal miner went public in Hong Kong in 2005.

'The mega sell-down shocked me a lot as I thought the two parties would have a strong relationship,' said a fund manager who was asked to take up some shares.

'Despite a small stake in Shenhua, no concrete co-operation materialised for the two firms over the three-year investment,' another fund manager said.

'Moreover, it's a good time for [Anglo American] to exit as coal prices have peaked lately.'

When it invested in Shenhua Energy, Anglo American said the stake would allow it to gain a foothold in the mainland's coal sector.

Last week, an undisclosed institutional investor sold a 0.6 per cent stake in Shenhua Energy for HK$690 million in a secondary placement.