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Mining M&A could get boost from $8bn of private equity dry powder

3 Feb 2014

mining_lrgMergers and acquisitions in the mining sector could soon get a major boost as private equity firms prepare to put as much as $8bn to work.

Private equity firms are looking to buy assets, while mining majors including Rio Tinto are looking to offload unwanted mines. Valuations are currently attractive, which demand for raw materials is expected to be strong, said a report by Bloomberg.

It noted that former CEOs of Xstrata Mick Davis and Barrick Gold Corp Aaron Regent have plans to buy mining projects backed by private equity funds.

Two mining ventures including one backed by Warburg Pincus and one managed y two former JP Morgan bankers were launched last week.

Only 14 per cent of the $10bn raised over the past two years by buyout firms has been deployed, according to Bloomberg data.

But firms could now start doing deals under pressure form their investors to act, co-head of mining and metals investment banking at Barclays Michael Rawlinson told Bloomberg.

“They’ve all set up, no one’s done anything. The sand is going through the hourglass and the money is going to get taken away if they don’t start spending,” said Rawlinson.

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