The value of private-equity deals in the mining industry will rise this year from $3.2 billion in 2015 as top producers seeking to cut the fat amid a global commodity rout offload unwanted operations, according to U.K. law firm Berwin Leighton Paisner.
“The majors are looking to divest a lot more,” Alexander Keepin, head of mining at BLP, said in a phone interview. “There should be a point where the value expectations of the majors and the cash available from the private-equity groups means that there will be more transactions.”
The biggest miners have been battered by the slump in commodity prices that’s forced producers to scrap payouts to investors, sell shares to bolster cash reserves and dispose of lower-quality mines and smelters.
Private-equity deals in mining have been increasing and jumped 57 percent last year, according to a report from BLP on Monday. The closely held investment groups have raised more than $12 billion since 2013, according to Bloomberg Intelligence.
“Prices have come down to a point where I think everyone is now more realistic in their expectations and there is a sort of desire to do deals, so M&A activity, I think, will pick up this year,” Keepin said. Private equity may raise more money this year, he said.
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