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Year update on Private Equity in Mining

Our annual ‘Private Equity in Mining’ report has revealed that over $3.15bn of private equity investment was injected into mining projects during 2015 over 119 deals.

The research shows a 238% increase in activity and a 57% increase in the amount mining private equity invested when compared with 2014. This had the effect of reducing the average investment size from $40m in 2014 to $26.5m, not surprising with falling equity and commodity prices.

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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. A further 18% of the equity investments were coupled with some form of debt. Taking into account these alternative structures, the total that was invested in 2015 was $4.53bn, doubling the amount invested when compared with 2014.

Other key findings within the report include:

  • Gold remains the most favoured commodity for private equity investors, accounting for over a third (36%) of all deals.
  • By value, Copper was the most popular commodity invested in, attracting $868m.
  • North America continues to see the largest number of deals, with $758m invested in 40 deals.
  • Europe was the only region that had a decrease in the number of deals (6), but has overtaken North America with the total value of those deals hitting $922m.
  • The number of African deals has nearly doubled in 2015, although Africa only saw a 22% increase in the amount invested, $367m.
  • Nearly 10% of all deals were as part of a wider refinancing or restructuring, often including a formal insolvency processes.

Previous Reports

Our annual ‘Private Equity in Mining’ report looks to reveal the key trends and activity in the mining sector.

Private Equity in Mining - 2015

Our annual ‘Private Equity in Mining’ report has revealed that over $3.15bn of private equity investment was injected into mining projects during 2015 over 119 deals.

The research shows a 238% increase in activity and a 57% increase in the amount mining private equity invested when compared with 2014. This had the effect of reducing the average investment size from $40m in 2014 to $26.5m, not surprising with falling equity and commodity prices.

Download the 2015 report >

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. A further 18% of the equity investments were coupled with some form of debt. Taking into account these alternative structures, the total that was invested in 2015 was $4.53bn, doubling the amount invested when compared with 2014.

Other key findings within the report include:

  • Gold remains the most favoured commodity for private equity investors, accounting for over a third (36%) of all deals.
  • By value, Copper was the most popular commodity invested in, attracting $868m.
  • North America continues to see the largest number of deals, with $758m invested in 40 deals.
  • Europe was the only region that had a decrease in the number of deals (6), but has overtaken North America with the total value of those deals hitting $922m.
  • The number of African deals has nearly doubled in 2015, although Africa only saw a 22% increase in the amount invested, $367m.
  • Nearly 10% of all deals were as part of a wider refinancing or restructuring, often including a formal insolvency processes.

Private Equity in Mining - 2014

At Indaba 2014 and following a number of high profile fundraisings for private equity funds by key industry figures, private equity was heralded as a potential saviour of the mining industry. Bloomberg reported that $8bn had been raised by private equity funds for investment in mining projects. Despite this, and perhaps in part due to continuing falls in commodity prices, 2014 has been another difficult year for the mining industry.

 

In this report we look at 50 private equity investments reported in 2014. These investments saw over $2bn of equity invested in mining companies by 30 private equity funds. This activity should only be the beginning, as private equity investment in the mining industry builds momentum. Assuming funds seek to deploy their capital over a two to three year investment horizon, there remains at least a further $6bn to be invested in the next eighteen months to two years. As these funds seek to deploy their capital we can expect further, more significant, private equity investment in the mining industry in the next 12 months.

 

Download the 2014 report >

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