Canada’s Financial Post published a report with the surprising news that private equity investors are growing into key players in the mining industry. Typically, mining is a niche market for PE, but brand-name US firms, such as Blackstone Group, Carlyle Group and Apollo Global Management, have all recently established mining practices, according to the article.
In Canada, PE firms targeting the mining sector are Brookfield and Resource Capital Funds. The role of PE is likely to grow as mining valuations fall, and equity financing remains tight, creating a “financial buyer’s market”.
An exec from Baker & McKenzie, said that private equity firms could raise USD 10 billion to USD 15 billion targeting mining investments in this year alone. Last year USD 8.5 billion was raised by eight mining-focused funds.
Canadian mining companies are having difficulties raising capital in the equity markets compared to the past five years. (Image source: Palladium)