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Buxton on Bumi: the deal is not acceptable
Markets
by Emma Dunkley on Oct 18, 2012 at 14:44
Buxton said: 'I think he [Rothschild] is concerned the independent directors may want to save face by countenancing some form of transaction.'
Despite governance concerns surrounding the firm, which Buxton said have been on the rise since the Bakries pledged their stock, the firm is fundamentally a good investment.
Buxton invested 2% in mining company Vallar, set up by Nathaniel Rothschild, when it floated in 2010. Vallar then became Bumi the following year, after a share-swap deal.
'The interesting thing is why did we buy Vallar in the first place?’ said Buxton, even though recent events have caused a drag.
‘It was not just the backing of Nat Rothschild – the independent directors are pretty experienced with strong track records in the mining and oil industry,’ he added.
Butxon said the rationale behind Vallar were the opportunities to acquire entities in the mining industry and the chance to ramp up volume growth.
‘I like coal in the long run,’ said Buxton, adding that around 70% of China’s manufacturing needs are met by coal.
However, the stock has fallen peak to trough from around £14 a share last year to around £1.50 at the beginning of this month.
‘The only thing you can do is take the hit and move on,’ said Buxton.
Citywire A-rated manager Hambro, who runs BlackRock’s BGF World Mining fund , sold down his stake in Bumi ahead of news that Rothschild had resigned from its board.
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