Botswana Picks Gareth Penny-Led Consortium to Buy 85% Stake in De Beers
Key Facts
Botswana’s government said in its State of the Nation address on November 9 that it had selected the Global Diamond Consortium, led by former De Beers chief executive Gareth Penny, as preferred bidder for Anglo American’s stake in the diamond company and had endorsed its proposed bid. The stake on offer represents 85% of De Beers, while Botswana currently owns 15%, according to Rapaport. The selection positions the government as a partner seeking to expand its ownership and influence in the company that markets the country’s diamonds. But the deal has not yet been finalized, according to the Associated Press, and neither the government nor the group has disclosed its financial terms. The news agency said Botswana’s participation in the consortium makes its support essential to advancing the acquisition.
President Duma Boko said the government selected the bid based on criteria including ensuring De Beers’ sustained profitability under an experienced, adequately funded operator. The criteria also included strengthening Botswana’s strategic influence and expanding local companies’ participation in the diamond value chain. Boko highlighted the importance of hedging public finances and sharing risk in a deal involving a sector on which the country economically depends. Botswana currently owns 15% of the company, while the proposed deal gives it an opportunity to increase its stake. Boko said the region’s major producing countries would sit together “for the first time” at the ownership table of the company that markets their diamonds.
One point of negotiation centers on the size of the stake Botswana will receive. Rapaport reported that the consortium has so far agreed to allocate 25% to the country, while the proposal aims to raise its stake to 30%. Reaching that target would require an agreement on an additional stake, and the parties have not announced a resolution of the gap. Botswana, according to Rapaport, has a right of first refusal on the sale of Anglo American’s stake. The government therefore remains central to determining the ownership transfer, whether through its participation in the group or through its right connected to the sale of the stake.
The consortium includes the governments of Botswana, Angola and Namibia, while a statement from the group also named Oman among the supporting governments, according to Rapaport. Boko said his country, Angola and Namibia would participate in the deal, describing the countries’ meeting at the ownership table as a regional first. The proposed arrangement brings diamond-producing countries together around ownership of the company that markets their output. However, details of each country’s stake or division of roles were not disclosed in the available information. Boko and the consortium also did not announce the bid’s value or official financial terms.
On financing, Rapaport quoted a source as saying the bid includes $750 million paid upfront to Anglo American and $250 million in deferred payments. The source said a proposed $500 million capital injection into De Beers remains under discussion. Boko and the consortium did not confirm these figures as disclosed terms, so they remain details attributed to the source who spoke to Rapaport. Continued discussion of the capital injection means the company’s post-deal financing is part of negotiations alongside the price of the stake. It remains unclear how the financial obligations will be divided among the group’s members or when they will be carried out.
The decision to sell or separate De Beers stems from Anglo American’s May 14, 2024, announcement that it would simplify its strategic portfolio. The company said at the time that the options were to sell or separate De Beers, with the aim of improving strategic flexibility for both the company and De Beers. Botswana’s selection of the consortium comes within that announced process, while the final form of the exit remains unresolved in the announcement. The diamond industry faces competition from lab-grown diamonds and declining spending on luxury goods in China, according to the Associated Press. The news agency added that Botswana’s diamond-dependent economy contracted in the previous year after a sharp drop in sales.
Penny said the consortium is now focused on completing agreements with Anglo American “as soon as possible.” He did not set a date for completing the agreements or closing the deal. The Associated Press confirmed that the group’s proposed purchase has not yet been completed, leaving execution subject to negotiations among the parties. Matters under discussion include Botswana’s stake, the bid’s terms and the proposed financing for De Beers. The disclosed information contained no further timetable or specific procedural steps for completing the sale.