Former Xstrata chief executive Mick Davis is armed and ready to go hunting unwanted mining assets after confirming he has raised $US5.6 billion ($7.2 billion) for his mining investment vehicle, X2.
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Mr Davis, who has raised capital for X2 over the last few years, announced overnight that the company had raised $US4 billion in committed equity capital available for immediate draw down, plus another $US1.6 billion in "conditional equity capital".
X2 described the raising as "one of the largest ever first-time raises for a private vehicle".
Mr Davis and his team, which includes a number of other former Xstrata executives, will have no shortage of assets to run his eye over, as struggling resources companies fight to slash costs and re-examine their asset portfolios.
The Wall Street Journal said X2 has had discussions with Rio Tinto, BHP Billiton and Anglo American in the past.
In Australia, a number of big name miners have assets that have or have had the for sale sign on them, perhaps most notably BHP Billiton's Nickel West mine in Western Australia which the global miner failed to sell last year. It is understood the asset is still up for sale at the right price.
Not surprisingly, X2's name has been touted as a potential bidder for many assets in recent years and It has so far expressed an interest in assets in coal and copper.
But despite having raised $US3.5 billion in previous funding rounds, it is yet to make its first acquisition.
"We continue to carefully review a number of opportunities in the sector in detail," Davis said in a statement.
"Whilst value-creating opportunities are increasingly evident, the long-term nature of our strategy provides us with the flexibility to target those opportunities where we see the greatest potential for value creation."
Mr Davis set up X2 only months after leaving the Xstrata when it was taken over by rival Glencore, run by Ivan Glasenberg, in 2013.
He had been able to attract a number of big-name investors, including private equity firm TPG Capital and Noble Group.
However the investors are likely to need patience to see big returns on their money.
While falling commodity prices have forced many miners to consider asset sales, lower prices also meant the task of turning around unwanted assets will become that much more difficult.
Mr Davis will also need to compete for acquisitions with a number of other vehicles keen to scoop up bargains– the largest of which is his old nemesis, Glencore.
Former Oz Minerals boss Owen Hegarty is another who has raised capital to go bargain hunting. In late January, Melbourne-based EMR Capital, a private equity firm Mr Hegarty co-founded, closed its first fund on Friday at $US450 million, ahead of a target of $US400 million, after 14 months of fundraising.
It wants to buy "strategic" stakes in miners across four commodities: potash, coking coal, copper and gold.
The Australian Financial Review
