Mining Private Equity Firms
Does anyone know any mining Private Equity firms? And what’s the value proposition like? IRR, MoM? Looks like a well-diversified portfolio can sell high: Coal, Diamonds, Gold, Venture, Growth etc?
To name a few: Resource Capital (Denver) Sentient Global Resources Orion Resource Partners (New York) Waterton (Toronto) Tembo Capital (London) Greenstone Resources (London) Appian (London) Denham (Boston) Lime Rock (Westport, CT)
Returns on Funds: YYYY | Net IRR | Net Multiple Resource Capital Fund III: 2003 | 22% | 1.99x Resource Capital Fund IV: 2006 | 21% | 1.94x Resource Capital Fund V: 2009 | n/a | 0.78x Resource Capital Fund VI: 2013 | n/a | 1.20x Waterton Precious Metals Fund II: 2013 | 13.3% | 1.25x Tembo Capital Mining Fund: 2014 | 5.4% | 1.03x
Numbers are slightly tweaked, but this should give you an impression on performance for the industry. Also note these aren't fully deployed fund figures.
I quickly ran through your last few topic discussions and I had a few questions or comments.
Why not raise money in London/Europe as opposed to the U.S.? I only say this since London is largely the mining sector's go-to hub for capital. There are a lot of good natural resource PE firms in the U.S. but most are in Denver or are energy-related. Also mining PE is having a difficult rap right now, many LPs feed capital into listed-mining ventures which are able to operate pretty lean and are run similar to a PE firm.
A number of the questions you’ve been asking are good questions that many managers ask their investment bankers/private fund advisors to advise them on. Therefore I don’t think you’ll find the answers you want or need on WSO.
Questions like what investment vehicle to use, what investors to target, and share issuance and price are difficult questions to answer in their own right and involve teams of people (bankers, advisors, consultants, lawyers, etc.) just to get it right.
WSO is loosely targeted toward early careers and very high-level Q&A. While there are very experienced and good investment bankers and PE guys on the site, they can only help so much with the limited information they have to go off of here.
If I were you I would network hard with the guys in South Africa and Botswana first and get their thoughts on the topic. I think what you are skipping over is that South Africa has the world’s leading minds on mining and finance. I am a little bit biased on South Africa here but do not underestimate the network around you. All the major banks have offices in Johannesburg with deal teams that deal with natural resources on a daily basis. Even if you could get some time with a consultant or two that could be beneficial to your end goal.
The guys on the ground in South Africa, will have a better idea than any whether your venture is feasible. Also on a side note, the institutional LPs in London and the U.S. will make reference calls to the same guys in South Africa if they are seriously considering investing in your project or not. Just some things to think about.
I only bring up London as possibly an easier pool of capital since investors will have better ties and better knowledge on Botswana than their U.S. counterparts. Plus, if you’re going to U.S. retail investors there is a good chance they will ask you what the effect of Ebola and Boka Haram are to your business. These are probably questions you don’t want to have answered when you have bigger concerns to be worried about like lower commodity prices, foreign exchange risks, and ESG issues.