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Private equity interest in mining rises

By   /   February 6, 2014  /   No Comments

Private equity funds are looking to invest their previously untouched money into mining assets, as mines yet to be snapped up by big-name firms look promising for fund-backed companies.

Mining potential for private equity

Approximately $8 billion has yet to be allocated to assets, and though buy out companies have been focusing on mining since late 2012, large scale interest has been relatively slow until now.

14% of the money, which is estimated to number about $10 billion, has been used in the past two years, stated Bloomberg Industries’ latest report. Two significant mining funds were established in recent weeks, with former private equity managers from big-name companies at the helm.

The attraction of investing in raw materials is largely attributed to the good valuations of these types of products on the market at this time. Investment banking experts have said this trend will rise, as investors begin to put pressure on private equity firms to spend the money that has been languishing in their funds.

Some managers commented that the situation is urgent, given that money might be retracted if funds were not distributed soon. This is the optimum time for purchasing mining assets, as significant mining companies released assets that are unsustainable in their trimmed-down post-crisis plan.

New mines are also being discovered on a large scale across the globe, creating ample resources for investment. The demand for raw materials is extremely high, especially in Asian countries such as China, and this need looks unlikely to dwindle in the coming years.

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