SNL sees up to $20bn private equity war chest boosting mining M&A – by Angela Kean ( – August 22, 2014)

SNL says market experts see mining M&A activity picking up as up to US$20 billion in private capital funds look for investments in the sector.

SNL Metals & Mining is the world’s largest source for integrated comprehensive data, expert analysis and breaking news in real time for the global mining industry. It encompasses worldwide exploration, development and production data to strategic planning and acquisitions information.

PERTH (SNL) – The much-anticipated influx of capital from new mining-focused private funds is taking longer than expected to hit the market, but market experts expect more deals to hit in the second half of 2014 and an increase in activity in early 2015.

Ernst & Young estimates that mining-focused private capital funds have amassed at least US$10 billion, and possibly as high as US$20 billion, to invest in the global metals and mining sector.

The firm’s global mining and metals transactions leader, Lee Downham, said mergers and acquisitions activity is likely to remain subdued for the rest of 2014 despite a strong deal pipeline and a private capital funds war chest yet to be unleashed.

“Dealmaking in the sector continues to be cautious, partly due to the continuing commitment to capital discipline, but also due to a lack of urgency over investment given the lack of competition for assets,” Downham said in a statement.

“Some standout deals and hostile bids during Q2, combined with a strong deal pipeline and substantial capital waiting to be deployed by mining-focused funds, suggest that momentum is building.”

While Ernst & Young’s year-over-year comparisons, which are based solely on completed deals, show a decline in deal volume and value in the first half of 2014, data compiled by SNL Metals & Mining that tracks announced deals indicates that the number and value of deals is on the rise.

Ernst & Young data shows total completed deal values for the first half down 69% year over year to US$16.7 billion from US$53.8 billion, with deal volumes down 34% to 254, from 386 in the first half of 2013.

Meanwhile, according to SNL data, the first six months of 2014 saw 117 announced deals totalling US$13.21 billion, a 56% increase on the 75 deals worth around US$11.47 billion announced in the same period of 2013.

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