[miningmx.com] – PRIVATE equity has turned to the mining sector with several former mining bosses including Mick Davis, Roger Agnelli and Aaron Regent finding there’s a pool of capital available to them, the Financial Times reported.
Davis, the former CEO of Xstrata, and Agnelli and Regent, who led Vale and Barrick Gold respectively have made comebacks on the back of private equity which sees value in a sector depressed by a slowing in the rate of growth in China.
The savvy mining executives, including those kicked off their perches when the mining market suddenly turned about a year ago, have taken up the guise of private equity to take advantage of the process. Buying cheaply at the bottom of the market and waiting for the up-cycle to begin again is the name of the game.
Miningmx reported on the phenomena in June. “Private equity has never been keen on mining resources in the past owing to the cyclicality of the market,’ head of Macquarie Research’s mining research in South Africa, Kieran Daly told Miningmx.
“But there have been a number of former mining CEOs popping up running them such that Mick is likely to have decent competition for these assets,’ he said.
Leigh Clifford, a former CEO of Rio Tinto is advisor to private equity firm KKR & Company which was considering bidding for the $1bn Australian copper mine Northparkes, also the target of another private equity investor, Carlyle Group.
There’s even talk that Tom Albanese, the former CEO of Rio Tinto, is considering private equity.
Of course, going private for mining bosses is not exactly the newest idea in the world. There’s a form of it in former Impala Platinum CEO Keith Rumble’s Sun Mining which aimed at finding assets in India and Russia while Regent, fired as CEO of Barrick Gold in 2012, established Magris Resources which aimed at assets in the Americas.
This is not to speak much of bankers who specialised in mining also taking to private equity such as SAS veteran, Ian Hamman, dubbed the king of M&A resources while at JP Morgan Cazenove and now a member of his own start-up, Strand Partners.
Another JP Morgan star, Lloyd Pengilly, who helped drive the GlencoreXstrata deal that eventually put pay to Davis’s future there, is establishing a $2bn African mining fund.
On September 30, Davis burst back on to the world mining stage raising $1bn for his Xstrata re-boot X2 Resources in a transaction that sees him take on marketer and logistics firm, Noble Group, and investment firm, TPG, as ‘partners’.
