[miningmx.com] – PRIVATE equity lifted its exposure to the mining last year with $3.15bn invested, a 57% increase in the amount of equity invested in 2014, according to a survey by Berwin Leighton Paisner (BLP), a law firm.
The wider issues in the industry have also encouraged private equity investors to seek alternative structures to generate returns, with 11% of deals in 2015 having exposure to the underlying commodity, for example by way of a royalty, the firm said.
“With the pure equity deals being seen largely as highly dilutive, equity interests combined with debt or exposure to underlying commodities through royalties are likely to continue to be the favoured structures in 2016,” said Alexander Keepin, Partner, corporate finance and co-head of mining, BLP.
“The continued depression in commodity prices and equity markets for natural resource companies means that private equity funding is likely to continue to be a primary source of finance in the mining industry in the next 12 months,” he said.
