Billionaire Agarwal Hires AngloGold's CEO to Run Vedanta

(Bloomberg) -- Anil Agarwal hired AngloGold Ashanti Ltd.'s Srinivasan Venkatakrishnan to run his Vedanta Resources Plc in a move that may hint at the Indian billionaire's plans for his global commodity portfolio.

Venkatakrishnan, 53, has been CEO of Johannesburg-based AngloGold for five years and spent much of his career working in Africa. That's a first for a Vedanta CEO and points to the growing importance of the Indian group's investments on the continent, where its assets include Zambian copper and South African zinc.

Agarwal, who is also mining giant Anglo American Plc's biggest shareholder, highlighted Venkatakrishnan's African experience in a statement Monday.

"It is interesting that Vedanta so clearly seems to be targeting South Africa as a key part of their strategy," said Sanford C. Bernstein Ltd. analyst Paul Gait. "Having a South African background, South African experience and the ability to negotiate in a South African environment is clearly something that Agarwal and Vedanta value."

Venkatakrishnan, who was born and educated in India, was CFO of Ashanti Goldfields Ltd. before its merger with AngloGold, where he served as finance chief for eight years until his promotion to CEO. During that time, he worked for six years alongside then-CEO Mark Cutifani, who now holds the top job at Anglo American.

‘Somehow Connected'

Agarwal surprised Anglo American's management last year when he took a 21 percent stake in the company, a move that has left the market speculating over his long-term intentions for the blue chip mining company. In 2016, Agarwal proposed a tie-up between Anglo and the zinc unit of Vedanta, and he said last year the combination would have been a good match.

"It's hard not to see these events as somehow connected," Bernstein's Gait said.

Agarwal, who has been hunting for a new Vedanta CEO for more than a year, has consistently sought talent from the world's biggest miners. He hired former Rio Tinto Group CEO Tom Albanese as chief executive in 2014 and former Anglo American head Cynthia Carroll worked as an adviser until last year.

Venkatakrishnan's South African experience looks more important than his corporate experience, Gait said. Agarwal has been a vocal supporter of the country, arguing that Anglo American should remain committed to its assets there.

Rising Sun

“Africa is tomorrow's rising sun,” Agarwal said in an interview last week in the Zambian capital Lusaka. He's told Anglo American that “you have to look at Africa, you have to invest in Africa,” he said.

Still, Venkatakrishnan's tenure as chief executive of AngloGold hasn't all been smooth sailing. The company was forced to scrap a $2.1 billion share sale and plan to split its South African and international assets in 2014 after an investor revolt.

And even though that plan failed, the company has continued to reduce its footprint in South Africa, where aging infrastructure, reserve depletion and accidents raised costs and put pressure on output. Last year AngloGold agreed to sell two mines in a deal that halved the gold producer's South African production.

That doesn't reflect poorly on Venkatakrishnan, said Yatish Chowthee, an analyst at Macquarie Group.

"He inherited a company that was navigating through difficult times and selling the South Africa assets was probably the best decision given the environment," Chowthee said. "He should fit in there, given the way Agarwal wants the company to go forward."

Vedanta declined 3.9 percent by 1:57 p.m. in London on Monday. The shares have lost 11 percent this year, valuing the company at about $2.8 billion. The company also has iron ore, aluminum and oil assets in India and plans to double its Indian copper capacity by 2020. AngloGold's stock has dropped 13 percent in the same period and is now worth $3.8 billion.

Vedanta, which is set to begin production at its new Gamsberg zinc mine in South Africa this year, had been searching for a new chief executive since Albanese's flagged departure last year. AngloGold has started a search to replace Venkatakrishnan.

--With assistance from Taonga Clifford Mitimingi

To contact the reporters on this story: Tom Wilson in London at twilson128@bloomberg.net, Felix Njini in Nairobi at fnjini@bloomberg.net, Thomas Biesheuvel in London at tbiesheuvel@bloomberg.net.

To contact the editors responsible for this story: Lynn Thomasson at lthomasson@bloomberg.net, Liezel Hill, Nicholas Larkin