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Pamodzi launches $1.3bn mining fund Posted: Fri, 03 Aug 2007 [miningmx.com] -- PAMODZI Investment Holdings, the firm from which Pamodzi Gold was spawned, has today unveiled details of a $1.3bn (R9bn) private equity fund - South Africa's largest - dedicated to investing in the country's mining sector and related infrastructure. "There is a tremendous opportunity to generate superior financial results from resources in sub-Saharan Africa," said Ndaba Ntsele, CEO of Pamodzi Investment Holdings. "Our optimism is shared by peer companies who have grown their private equity investments in mining and natural resources by a factor of four over the past year," he said. Pamodzi also led the Inyosi consortium that bought in February a R7bn, 26% stake in Anglo Coal, the coal unit owned by Anglo American. The 10-year term Pamodzi Resources Fund (PRF) has been backed by Hans Mende, the joint founder of American Metals and Coal International Inc, one of the world's largest coal companies, and a shareholder in Pallinghurst Resources, Brian Gilbertson's newly created firm. "I’ve been in resources for up to 40 years in the US and Australia. The next five years will be a highly favourable for South African mining," said Mende in an interview with Miningmx. "It's a place we have come to target." In terms of the fund, a maximum investment of $325m (R2.2bn) will be allowed with Pamodzi preferring to take control of any investments it makes. S’bu Mngadi, who specialises in new business for Pamodzi Investment Holdings, said a significant portion of PRF could be deployed within 12 to 18 months. “We’ve scanned the landscape in detail. The deal pipeline could be described as a treasure trove for private equity,” he said. “We’re able to invest without the bureaucracy of a BHP Billiton or Anglo American. We’re brave, and make decisions quickly,” said Ntsele. Investment includes rail, power and ports in South Africa crucial to transporting raw materials from inland mines to global markets. Mngadi said discussions with Eskom and Transnet had taken place. He hoped Pamodzi would be able to expedite certain projects. The PRF dwarfs the R5.5bn and R6.1bn raised in private equity by Ethos and Brait respectively, hithero the largest funds in South Africa. It is also larger than the New Africa Mining Fund (NAMF) that raised about R550m in its first iteration; a second NAMF is being developed thought to contain investment of R2bn. Said Roger Baxter, senior economist at the Chamber of Mines: “Creating competing funds for investment in the mining sector can only be a good thing,” The issue, however, is how Pamodzi goes about its business. “I’ve got to say that in private equity, there have been good and bad experiences. They have a certain way of doing things,” said Baxter. Mngadi said delistings of existing mining companies was a possibility. "If need be. If we can unlock value, definitely,” he said. There was also the prospect that the PRF could be followed by a second fund. Kobus du Plooy, an executive director at Pamodzi Investment Holdings, who will be involved in launching the fund, says precious and base metals are potential targets for the fund. There’s also a specific interest in helping consolidate the country’s coal sector which outside the big four coal exporters, including Anglo Coal and BHP Billiton, is highly fractured and in need of capital. Like NAMF, Du Plooy says Pamodzi Investment Holdings could help fund exploration firm, those entities working far from cash flow. However, PRF is not mandated to put more than a third of total funds in one sector. “It’ll be a balanced portfolio of developmental and exploration mining and projects in the prefeasibility stage,” said Du Plooy. As with NAMF, PRF’s capital will not restricted to South Africa. There’s just too much going on elsewhere in Africa. For instance, Pamodzi Investment Holdings may invest in the Congo or Angola, both of which share diamond riches; while the Congo’s copper and cobalt resources, and gold in the north east of the country, are rich if not troubled by political and regulatory uncertainty. “The spirit of Nepad is central to the fund,” said Du Plooy. Click Here to subscribe to our daily newsletter
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