Mick Davis, former chief executive officer of Xstrata Plc, raised US$1 billion ($1.26 billion) from Noble Group and private-equity fund TPG to start a resources company.
Noble, Asia’s largest raw-materials trader, and TPG agreed to each invest US$500 million in the new company X2 Resources, according to a statement today from X2 Partners, founded by Davis and former Xstrata Chief Financial Officer Trevor Reid.
X2, in talks also with other potential investors, will use the funds to start a diversified mining and metals group. Davis, 55, and Reid, 52, were part of the executive team that established Xstrata, a company that grew 100-fold to a market value of about US$50 billion after 10 years of mergers, acquisitions and expansion.
“This is a great time to acquire assets in the mining sector,” said John Meyer, an analyst at London-based SP Angel Corporate Finance LLP. “The majors continue to offer sub-scale assets, including some better quality but smaller operations as they refocus on their larger cash generators.
“Investors who follow Davis and other turnaround specialists in the sector could make a killing,” he said.
Barrick Gold Corp. ex-CEO Aaron Regent and former JPMorgan Chase & Co. banker Lloyd Pengilly are among those also raking through unexploited mining assets. BHP Billiton Ltd. and Rio Tinto Group are leading asset disposals and may sell businesses and stakes amounting to as much as $35 billion, Deutsche Bank AG says.
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