The owners of diamond group De Beers, including miner Anglo American Plc, are mulling a possible re-listing for the firm but feel the time is not yet right, sources close to the situation said, according to Reuters.
A flotation would bring De Beers full circle after it scrapped a listing in Johannesburg and went private in 2001, but since the diamond sector has just been through a devastating downturn, would likely be at least a year away, the report said.
The three owners have no pressing need for a listing but it is an option being looked at, the sources said.
"It's something that might happen down the track," said one source who declined to be named.
De Beers Chief Executive Gareth Penny said a stock market listing was a possible strategy in reply to a question at a lunch presentation for investors in Cape Town last month, according to a fund manager who attended.
Both Anglo, with a 45 percent stake, and South Africa's Oppenheimer family - which owns 40 percent and has a management contract for De Beers - declined to comment. The Botswana government, with 15 percent, was not available for comment.
De Beers, which controls about 40 percent of global rough diamond supply, also declined to comment.
"Any questions about the shareholding structure of De Beers is a matter for the shareholders themselves to comment on," the company said. "The management of De Beers is completely focused on delivering strong growth for our shareholders."
ANGLO'S INTEREST
If De Beers was planning for a listing, this would be positive for Anglo American shareholders, said a fund manager with a holding in Anglo.
"If there were to be a listing, I would assume that the incentive to maximise profits prior to the listing would be very large because one would want to place some sort of multiple on the company and establish a track record," he said.
Last year De Beers accounted for only 1 percent of Anglo's group operating profit, down from 5 percent in 2008, but Anglo Chairman John Parker told the annual shareholder meeting last month that the group still regarded De Beers as a core activity.
Analysts said a listing would provide a range of options for shareholders, including exiting their investment, a partial divestment or one party buying out other investors.
"My view is that Anglo American would if anything look to increase rather than decrease its stake in De Beers and would welcome a controlling stake," said analyst Alison Turner at Panmure Gordon in London.
De Beers had a strong first quarter with sales five times the level of last year, Finance Director Stuart Brown told Reuters in March.
"De Beers has put its recovery on an even keel, but it hasn't recovered yet. You certainly wouldn't sell the company when it's only just picked itself off its knees," said analyst Des Kilalea RBC Capital Markets in London.
"A lot will depend on where Anglo is at that time. De Beers is not a very big part of Anglo, but if the company looks like it's going to do better and Anglo doesn't need the capital, then there wouldn't be any need necessarily to divest."
REFINANCING
A market listing would make any future fundraising easier. De Beers needed a fresh influx of capital during the downturn that hammered the diamond sector and raised $1 billion from a rights issue to cut its net debt to $1.9 billion.
The firm did not have the option of seeking funds from a wide pool of institutional investors on the stock market. The $1 billion injection had to be coughed up by Anglo, the Oppenheimers and the Botswana government.
A stock market filing showed the Oppenheimers used their holding in Anglo as security for a loan facility just before the fund raising was finalised.
Shareholders have also previously provided interest-free loans to De Beers, which totalled $759 million at the end of 2009. A listing would be one way of retrieving those funds, analysts said.
