Rio Tinto has come under pressure from an activist investor to abandon its primary London listing and unify its business in Australia, according to a report.
UK-based fund Palliser Capital said that the miner’s dual corporate structure was hindering the company’s ambitions to carry out major acquisitions. It said this meant the London-listed company was trading at a $27bn discount to its Australian entity.
“What we think is the root cause of the undervaluation is an extremely clunky and outdated dual-listed corporate structure,” James Smith, Palliser’s chief investment officer, said today while giving a presentation at the Sohn Hong Kong investment conference, according to a report by the Financial Times.
Palliser holds less than one per cent of shares in Rio Tinto, but this represents one of the fund’s largest holdings worth hundreds of millions of pounds, the report said.
Rio Tinto, which is the world’s second largest mining company, told the Financial Times that it regularly looks at a range of options and ideas that could boost shareholder value and that it has a “policy of open dialogue with all shareholders around these topics”.
Palliser and Rio Tinto were contacted for comment on the report.
Palliser’s call comes amid consolidation in the mining sector, with BHP currently attempting to buy London-listed miner Anglo American.
Anglo American rejected BHP’s latest £38.6bn bid yesterday but said it would continue talks with the firm and extended the takeover deadline to 5pm next Wednesday.
Palliser declined to comment.