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An activist investor has taken a stake in Rio Tinto and is calling for the mining giant to abandon its primary listing in London and unify its corporate structure in Australia.
Palliser Capital, a UK-based fund, said on Thursday that Rio’s current dual corporate structure was a barrier to its strategic plans, which made it difficult to do major acquisitions and meant the London-listed company was trading at a $27bn discount to its Australian entity.
Unifying the entities and moving the primary listing to Sydney, as rival BHP did two years ago, would result in the FTSE 100 losing the world’s second-largest mining company.
The fund, which presented its position at the Sohn Hong Kong investment conference on Thursday, is launching its campaign amid intensifying consolidation in the mining sector, after London-listed Anglo American on Wednesday extended its talks with BHP over a blockbuster takeover bid.
Palliser argues that Rio’s dual-listed structure prevents it from pursuing all-stock takeovers because of the company’s valuation gap and complex corporate governance. Investors are also against using cash to do large deals because of the significant financing involved.
Rio did not immediately respond to a request for comment.
Additional reporting by Robin Harding and William Sandlund in Hong Kong
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