London - The bankers behind the private-equity investments of Barclays in the natural resources sector bought the business from the British lender, creating a new buyout firm with $1.7 billion in assets.
The management-led deal forms Global Natural Resource Investments, a London-based private equity firm with offices in Doha, Qatar, that will focus on commodities deals outside the US oil and gas upstream sector, the company said on Wednesday in a statement. GNRI didn’t disclose how much it paid.
Barclays, which has scaled back its presence in commodities over the past five years, will remain an investor alongside the sovereign wealth fund of Qatar. The billionaire brothers Eddie and Sol Zakay are also investors.
“The requirement for private equity capital in the global natural resources sector is stronger than ever and the current volatility in commodity prices is creating a positive backdrop for patient private equity,” said GNRI CEO Mark Brown, who previously headed Barclays’s natural resources investments.
Allocating funds
Brown said the business has returned 2.4 times the money invested since its inception in 2006 as a unit of Barclays. Of the $1.7 billion that GNRI has under management, the company has yet to invest $800 million.
The new buyout joins a rush of private equity firms searching for deals in the natural resources sector after oil and other commodities prices plunged. The top four private- equity groups, Carlyle Group, Apollo Global Management, Blackstone Group and KKR & Co, have raised at least $30 billion for commodities deals in the past 18 months, according to data compiled by Bloomberg.
Former bankers and executives, including Mick Davis, a past chief of Xstrata, Barrick Gold’s ex-CEO Aaron Regent, former JPMorgan Chase & Co banker Lloyd Pengilly and Sam Laidlaw, once chief of Centrica, have set up companies and funds to bid for assets put up for sale by the world’s biggest oil and mining companies.
Brown, who is taking a team of around 14 people with him, said his company wasn’t just another startup private-equity firm trying to raise funds.
“The difference is we have a portfolio,” he said in an interview. “We have invested in 15 companies, and we are managing $1.7 billion. It’s a real business: we have copper assets in Botswana and Peru, we are drilling in the North Sea.”
The former Barclays banker said the biggest opportunities lay in copper, oil and gas. He cautioned, however, that the drop in commodities prices hadn’t yet created a buyers market, other than for poor assets he wasn’t interested in. “Good assets are still commanding premium prices,” Brown said.
BLOOMBERG