The Oppenheimer family, Africa’s second richest family, have finally sold their 40 percent stake in De Beers to Anglo American for $5.1 billion—after having rebuffed approaches from Anglo in the past. Although specifics surrounding the decision to sell have not been disclosed, sources reveal that the Oppenheimer’s bowed out in order to preserve their family fortune which was adversely affected by the global financial crisis, and to settle family disagreements about investments. 

The Oppenheimer’s fortune saw a decline during the 2008 financial crisis. Their family holdings were mostly tied up in private equity in which a quick exit and turn of profit was not possible in the short term. De Beers had also been battling debt for the bulk of the past decade, with debt of $1.76 billion at the end of 2010 (vs. 2000 when it had a net cash flow of over $1 billion).

"They had to put  $400 million in cash into De Beers, which they didn't have. And they had to borrow that money against their stake in Anglo American," said a source close to the Oppenheimer family.

“It was an extraordinarily emotional and difficult thing for us. I think also difficult because the family have been in diamonds since my grandfather came to South Africa in 1902,” said Nicky Oppenheimer, current De Beers chairman, to Reuters.

Sources say that Mary Slack, sister of De Beers chairman Nicky Oppenheimer, had been growing concerned about the family’s financial burdens with De Beers. Peter Major, a mining analyst at Cadiz Corporate Solutions in Cape Town, said that he believes Slack had considerable influence over the family’s decision to sell their De Beers stake.

Nicky Oppenheimer said the decision to exit De Beers was unanimous, but declined to provide details. He also said the family will continue to manage its wealth and plans to reinvest a large part of the proceeds of the sale in African ventures, such as healthcare, agriculture, retail, and media.

“While one will miss the Oppenheimer involvement, there is a strengthening of shareholders. Anglo has been an amazing shareholder in the recession,” said a trusted source at Anglo.

According to De Beers, prices of rough diamonds increased by about 35 per cent during the first half of 2011.

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