De Beers Selling out to Anglo - Nicky Oppenheimer

Nicky Oppenheimer speaks on what the family is planning to do with the $5.1bn it will receive from Anglo American for its stake in De Beers

ALEC HOGG: The big story of the day is the Oppenheimer family selling out of De Beers. Peter Major, the mining consultant at Cadiz Corporate Solutions joins us now. Peter, I must tell you I'm very partial to the Oppenheimers, certainly to the grand old lady of racing - she's our first lady in the racing industry, Bridget Oppenheimer. I would have thought in a case like this she and Harry had spent so much time together - this was their company - couldn't the kids have waited a little bit longer?

PETER MAJOR: Gee, I don't know, Alec. If you say that the diamond price hit an all-time high three months ago - and that means they were much higher, like 25%, 30% higher than at the peak in 2008, and I'm guessing this deal was probably consummated three, four months ago at its peak - I'd say perfect timing. You know, if you wait two more years it might look like the bottom or too late, when the company was going cap in hand trying to borrow 1.5bn, 2bn just to keep it liquid.

ALEC HOGG: So the timing was right. Nicky's done a good thing. What about his son, though, Jonathan? He had shown interest in getting involved at De Beers.

PETER MAJOR: He had, and he's been quite involved in the business at different levels. But I'm trying to think through in how many companies the fourth generation is really strong, committed, and desirous to keep it going. You can maybe say Ford Motor Company has three, four generations there, with Bill running it. But are Bill Gates' kids really going to want to take over Microsoft? Are Steven Jobs kids going to want to run Apple? So I think you get more removed as the generations go by, and the companies that always - do I say are always under threat? - yes, it's a monopoly. Times are changing, you've got big competitors, like Russia, Canada, Australia, Angola and Botswana wanting a bigger say in things. Nicky's mid-60s.
    So I don't know if it would be worth Jonathan's while to say: "Let's keep all the family fortune, De Beers, and darn it, I want to keep running it - or trying to run it."

ALEC HOGG: Well, the man you're talking about, Nicky Oppenheimer, in fact joins us now. Nicky, good to have you on the programme. We are very sad, some of us, to see that the family is leaving the De Beers myth. It couldn't have been an easy decision.

NICKY OPPENHEIMER: Alec, evening to you. No, obviously very emotional for all of us in the family when we debated whether this was the right thing to do or not. You know, it's a 100 years of history - 1902 when my grandfather came out here first to join the diamond business in Kimberley. So indeed very emotional. But at the end of the day we in the family decided this was indeed the right thing to do, and it was a unanimous decision. And in a sense you've got to move on and now's the time to look to the future and think what exciting things we can do in Africa in the future.

ALEC HOGG: I'm glad to hear that. We were in conversation earlier - I asked Wayne McCurrie if this was a sign from one of the very pro-South Africans that maybe he's losing confidence in the country?

NICKY OPPENHEIMER: Absolutely not. Obviously, nothing is going to happen very quickly because, as you will have seen in the announcement, Anglo need to get a lot of regulatory approvals before this thing will complete, and it's looking like it's nine months or so before that will happen. So nothing will change for the next nine months-plus. I'll still be chairman of De Beers, Jonathan and I will be fully engaged in the company. But after that, after it closes, then we will be looking for opportunities and we are very Africa-orientated and we are going to be looking, obviously, around the world, but there will be a very clear African bias to what we hope to do in the future.

ALEC HOGG: And Jonathan not keen to continue with the family dynasty?

NICKY OPPENHEIMER: No, very emotional and very difficult but, at the end of the day, it's in the interests of the family and we all signed up that this was the right thing to do, and now we've got to look forward.

ALEC HOGG: Nicky, the comment that Peter Major made a moment ago - that the price was probably negotiated a few months back at the absolute peak of the diamond market. Is he accurate?

NICKY OPPENHEIMER: No, that's completely untrue. This whole thing was started some three-and-a-half weeks ago, when I met with John Parker, the chairman of Anglo, and he told me they were keen to buy our stake. That came out of the blue to me. I know there's been a lot of speculation before that something was to happen, but it was just speculation. We'd never had any discussions with Anglo before, so this has all happened very quickly.

ALEC HOGG: So they hadn't actually approached you with a  similar transaction previously?

NICKY OPPENHEIMER: No, this was the first time we talked about these matters.

ALEC HOGG: What happens from here? Obviously it's a huge amount of money that you are the custodian of. Where does it go forward, how does that get a applied?

NICKY OPPENHEIMER: Well, we're going to be obviously looking at investments. As I say, it will have a clear African bias. We've got nine months or so, plus, to really think where and what we want to do. It's all happened so quickly - I can't give you a steer about any specifics, but that's a nice problem to have. And that's a compensation for the sadness and the emotional feeling we have about De Beers. And in a sense, even though we'll be out of De Beers and precluded from being in the diamond business for a couple of years, we'll always be emotionally involved with De Beers.

ALEC HOGG: Peter, Have you got a question for Nicky Oppenheimer?

PETER MAJOR: You kind of asked my question, Alec. What are you going to do with the money? This is big money. I remember how hard Mark Shuttleworth was looking for a home when he started out with $500m, and how much harder it was when we got up to $1.5bn. So now you are starting with over five.

NICKY OPPENHEIMER: No, it's going to be a very challenging question. I think we've got an excellent team of people within the family, based here in Johannesburg, and I'm a great believer that, if you know how to operate in Africa, there are unbelievable opportunities. And that's something we are looking forward to - to answering that question when the deal is indeed completed.

ALEC HOGG: Thank you Nicky. I'm sure there are lots of other Afro-optimists who are felling with a chill going down their pine, as I am, that it's great to see that you are not doing a Mark Shuttleworth and externalising your funds, but in fact it's going to stay on the continent.

NICKY OPPENHEIMER: Thanks very much.

ALEC HOGG: Peter?

PETER MAJOR: I'd like to see the grin on Cynthia's face, because I think she's probably happy. This was a difficult holding for them because she didn't really have the control that she'd like on the others, and we've seen mining houses the last 10, 12 years have all gone - they want as much of the cash flow as possible. They want control over their assets or they'd rather sell them off. And this one sat very uncomfortably with Anglos for really the last 10 years. And now she's got the full business - and the big money, as we know, is in mining. It's not in downstream processing like we used to believe a decade or two ago. It's the guys digging it out of the ground. That's where the big margin is, and that's where you have control.

ALEC HOGG: Wayne McCurrie, you often accuse me of being a philosopher, and I was proud to read the other day that George Soros says he's a philosopher first and an investor second. Well, that's about the closest thing that we've got together. But it will make a lot of people very excited to see that the Oppenheimers are taking what would I suppose be sterilised money and, from what Nicky has told us, now investing it in other parts of Africa.

WAYNE McCURRIE: Look, that obviously will be good news. But we'll have to see - it'll take them a long time to actually identify where they want to go and what they want to do. And of course, as Nicky says, it'll take a long time for the money to actually come out into their pockets and they'll take their while and look around. So it will eventually happen to some degree, but it's going to take a long time. It's not next week.

ALEC HOGG: Well, it's a good news story all round. As Peter Major says, Anglo American is very excited. You heard the new area that Nicky Oppenheimer is going to be going through into. And I think anybody who is confident about this country and this continent can take a lot of perhaps support from what we heard this evening.

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