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The $11bn platinum business being spun out of Anglo American will debut a secondary listing in London on Monday, in a significant milestone for the restructuring of the FTSE 100 mining company.
Valterra, formerly known as Anglo American Platinum, is the world’s most valuable platinum producer and has benefited from a recent upturn in prices for the metal used in catalytic converters.
The spin-off marks the biggest step yet by Anglo American as it implements an overhaul developed last year while it fought off a hostile £39bn offer by rival miner BHP.
The slimmed down Anglo American could be a more attractive takeover target once the demerger is complete, according to analysts and bankers.
The company is also disposing of its nickel, coal and diamonds businesses to focus on copper and iron ore.
Valterra has its primary listing in Johannesburg. Its London-listed shares will be distributed to Anglo American shareholders — differing from a traditional initial public offering in which shares are priced at an attractive level to engineer a first day rise.
Because Anglo American is a member of the FTSE 100 and Valterra is not, the passive index tracker funds that receive Valterra shares are expected to sell them, potentially leading to a rocky start.
“The risk of volatility is high, given the quantum of trading that has to be done in the first couple of days,” said Ben Davis, analyst at RBC. He calculated that about 8 per cent of Valterra’s stock, or 21mn shares, would be distributed to passive index funds that are likely to sell their holdings.
Anglo American has taken steps to minimise disruption during the transaction, including by reducing its Valterra holding from 78.6 per cent to 66.7 per cent over the past year. It will retain just under 20 per cent of the platinum company.
The short-term outlook for platinum prices has improved because of the slower adoption of electric vehicles and the sustained use of internal combustion engines that often use platinum and palladium in their catalytic converters.
Platinum prices touched a two-year high last week, after rising 20 per cent since the start of the year.
Valterra chief executive Craig Miller said this month that the new company would be “more agile and more decisive” as a standalone business.
“Instead of competing for capital with other commodities in a diversified company, we get to invest that capital back into the quality assets that we have,” he said.
Anglo American is reorganising its shares with an approximately 12 per cent consolidation designed to keep the share price at roughly the same level as before the split.
