Capital markets meet M&A The
UK’s first purchase of equity via mandatory
Volcan Investments has funded its purchase of a 19.35%
stake in UK mining giant Anglo American via the issuance of two
three-year mandatory exchange bonds. The transaction is a first
in the European market.
The landmark structure, which now makes Volcan one of the
largest shareholders in Anglo American, relies on the sale of a
combined £3.5 billion ($4.6 billion) of secured limited
recourse mandatorily exchangeable bonds over two separate
transactions. It is also known as a purchase of equity via
mandatory securities (Poems) transaction, though this is sole
bookrunner JP Morgan's own label for this product.
The structure is believed to have been used only once before
in the US, but using derivatives instead of bonds.
Chop and change An initial £2 billion was raised