With Rio seemingly pursuing Arcadium, Australia’s largest investor, AustralianSuper, has moved to boost its shareholding in Pilbara Minerals.
AustralianSuper has increased its already substantial stake in one of the country’s best-performing (and surviving) lithium miners, Pilbara Minerals, over the past three months.
The fund spent $64 million buying 32 million shares, raising its stake to 10.9% of Pilbara Minerals—an ownership level that would prevent a bidder from gaining 100% control of the company.
Last year, AustralianSuper built a stake of more than 15% in Origin Energy to block a joint bid from two major Canadian and US investors.
AustralianSuper now owns more than 282.29 million shares of Pilbara, while Ganfeng, Pilbara’s major Chinese customer, holds just over 172 million shares, which were involved in a peculiar deal last week.
Ganfeng resolved a market mystery that had knocked the share price of the major lithium spodumene producer. Pilbara shares fell midweek after market speculation suggested a significant block of shares was available or seeking a buyer. Ganfeng was mentioned in discussions, alongside US banks and brokers, Morgan Stanley and Bank of America.
News of the floating share parcel caused the company’s shares to lose more than 5% last week, including a drop of over 3% on Friday.
However, well after the market closed on Friday evening, Pilbara Minerals released a statement to the ASX revealing complex put and option arrangements between Ganfeng and the two US banks and brokers.
The two deals cover 105 million of the 172.684 million Pilbara shares held by Ganfeng.
Ganfeng announced that put and call option deals were established with Morgan Stanley International and Merrill Lynch International for 52,700,986 Pilbara shares each.
The deals were executed at a strike price of $3.16 per Pilbara share, giving a notional value of more than $333 million.
There are 87 separate put and call options between Ganfeng and each of the two US investment banks (the deal appears to have been done in London). This totals 174 separate put and call options, each with the same prices.
Pilbara shares closed at $3.05 on Friday, meaning Ganfeng is slightly underwater on its derivatives.
In a statement accompanying the release, Pilbara CEO Dale Henderson seemed to downplay the deals.
"Pilbara Minerals is releasing this letter to ensure full transparency; however, we have no reason to believe that the information, in itself, is materially price sensitive, and we are not aware of any additional relevant information,” he stated.
He offered no explanation as to why Ganfeng had entered into this deal.
