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X2 Resources

Mick Davis says commodities prices close to bottoming out – by James Wilson and Neil Hume (Financial Times – April 21, 2015)

http://www.ft.com/intl/markets/commodities

Lausanne – Mick Davis, one of the mining sector’s most prolific dealmakers, on Tuesday declared that commodities prices were close to bottoming out, and signalled that this may be the year his X2 private equity vehicle starts buying assets.

The sector has been eager to see how the former Xstrata chief executive would invest after he raised up to $5.6bn to fund his ambition of building a mid-tier diversified miner.

At the FT Commodities Global Summit in Lausanne, Mr Davis said there were now “squeaks of distress” from some companies, with plunging commodities prices hitting corporate valuations. “Are we towards the bottom of the market? Yes. Whether we have reached the bottom of the market, I would not know,” he added.

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BHP Spinoff’s Tailspin Is Dream for X2’s Mick Davis: Real M&A – by Brett Foley, Firat Kayakiran and James Paton (Bloomberg News – April 20, 2015)

http://www.bloomberg.com/

The plunging value of BHP Billiton Ltd.’s planned mining spinoff could hardly be better timed for the man who’s thinking of buying it.

Weeks from listing, the valuation of the new company, called South32, has plunged by almost half to as little as $7 billion, based on current prices for its products including alumina, manganese and nickel, Deutsche Bank AG estimated this month. That’s a gift for Mick Davis and his X2 Resources fund, which is weighing an eventual bid for South32, according to people familiar with his plans.

Davis, the former head of mining giant Xstrata Plc, has an untapped $5.6 billion fund that could be bolstered with debt to swallow a larger business. Amid the worst commodity slump in half a decade, South32 is still a target, with some analysts expecting its earnings to rebound when prices recover.

“They are good assets in challenged industries,” said Paul Phillips, a Melbourne-based analyst with Perennial Investment Partners Ltd., which manages about A$18.5 billion ($14 billion) of assets. “They have a lot of attractive features.”

BHP is carving off the business to focus on a smaller group of commodities and South32 is set to start trading May 18 in Australia, South Africa and the U.K. The newly formed company will include an Australian mine that’s the world’s largest silver and lead operation, a nickel mine in Colombia and aluminum assets in three countries.

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Former Xstrata boss Mick Davis’ Canada links set mining rumour mill turning – by James Thomson (Australian Financial Review – April 13, 2015)

http://www.afr.com/

They seek him here, they seek him there, those miners seek him everywhere! Mining industry chief Mick Davis might not exactly have a secret identity like the Scarlet Pimpernel, but he seems to share a few common traits with the legendary literary figure right at the moment.

The former Xstrata boss now heads up X2 Resources and has raised about $7.2 billion to buy unloved, undervalued and unwanted mining assets and companies.

It’s such a huge amount of money and such a huge brief that, like the Scarlet Pimpernel, he seems to be everywhere at once. His exploits are talked about in hushed tones by unnamed sources and no one is exactly sure where he might strike first.

Will it be a raid on BHP Billiton’s South32, before or after it is spun off? Does he have his eyes on assets within Rio Tinto or Anglo American’s giant portfolios? Could he swoop in Australia, Canada, London or South Africa?

On the weekend there was a sighting of the Mining Pimpernel in Canada, with a Bloomberg report saying unnamed sources had linked Davis with three Canadian mining companies.

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Ex-Xstrata CEO Davis Said to Close In on Canada-Based Miners – by Thomas Biesheuvel and Firat Kayakiran (Bloomberg News – April 10, 2015)

http://www.bloomberg.com/

Mick Davis is considering buying a Toronto-listed mining company as the former Xstrata Plc chief executive officer eyes fresh targets for his $5.6 billion war chest, according to two people familiar with his plans.

A deal in Canada could be a prelude to the bigger acquisition he’s been seeking for some time, the people said, who asked not to be identified because the deliberations are private. Davis’s X2 Resources is weighing an eventual bid for South32 Ltd., the miner being spun off next month by BHP Billiton Ltd. that’s been the subject of takeover speculation, they said.

In the meantime, X2 is looking at Canadian companies with copper, coal or nickel mines and is pursuing assets with a value of $500 million to $2.5 billion, said the people. Davis may conclude a deal within six months, the people said.

Hudbay Minerals Inc., Capstone Mining Corp. and Imperial Metals Corp. are among companies that X2 is studying as takeover candidates, according to the people. All three stocks advance in Toronto trading, Hudbay climbing 0.7 percent, Capstone 4.7 percent and Imperial Metals 0.9 percent.

X2, based in London, declined to comment. The switch to smaller mining companies and assets signals a change of tack from X2. The fund has been hunting for assets from the world’s largest miners such as BHP, Anglo American Plc and Vale SA, but has been unable to reach a deal, 18 months after the fund was started.

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Former Xstrata CEO under pressure to make new mining deals – by Silvia Antonioli and Freya Berry (Reuters India – March 31, 2015)

http://in.reuters.com/

LONDON, March 31 (Reuters) – More than a year after he launched his private fund, former Xstrata boss Mick Davis is coming under pressure to build a new mining empire with the $6 billion in capital he has raised.

The renowned dealmaker set up X2 Resources 18 months ago after Glencore’s $46 billion takeover of Xstrata, when he was passed over for the top job in favour of his Glencore counterpart, Ivan Glasenberg.

Davis has since approached most large mining companies looking to buy a variety of assets, banking and industry sources said, but nobody has agreed to sell given a feeling that current prices are at rock bottom and may turn up again before long.

“Mick’s team has been looking at so many assets closely. But nobody wanted to sell to them. Vale didn’t want to sell, Rio didn’t want to sell, BHP didn’t want to sell,” said an industry source close to Davis. With his portfolio still empty, some sources expressed concern that some investors’ patience with Davis may run thin.

A banking source said: “Not all those investors are stuck on mining. So they say: if we can’t spend on this, we’ll go buy a bank or a supermarket.”

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Mining private equity: It’s Davis or bust? – by Frik Els (Mining.com – March 25, 2015)

http://www.mining.com/

The number of mergers and acquisitions in the mining and metals industry declined to the lowest in a decade last year. Big deals were few and far between and the 11 deals worth more than a billion were miners buying mines. Overall 80% of deals in terms of value were made by industry insiders.

After years of talk, the private equity billions destined for the sector remain mostly on the sidelines (or are seeking greener pastures). The deals that have been pushed through from outsiders (or ex-insiders to be more precise) have been small, highly targeted and often go unnoticed (it’s called private equity for a reason).

All eyes are on Mick Davis and his $5.6 billion X2 fund to open the floodgates (or at least set the ball rolling). But the ex-Billiton CFO has so far failed to pull the trigger despite the likes of Anglo-American, BHP Billiton and Vale putting assets up for sale.

With X2 Davis, who is a cricket fanatic, appears to be taking a five-day test approach (which often ends without a result), rather than going for a quick Twenty20 win.

Still, the caution seems somewhat uncharacteristic. Davis built Xstrata over less than a decade through a series of billion dollar transactions into a company with 70,000 employees in 20 countries. Xstrata’s market value peaked in 2008 at $85 billion.

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THE LUNCH: The skinny on ex-Xstrata boss Mick Davis and X2 – by Eric Reguly (Globe and Mail – March 13, 2015)

The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

LONDON — There’s a lot less to Mick Davis than there used to be.

Let’s start with the man himself. When he was running Xstrata PLC, the mining company he sold to Glencore PLC, the world’s biggest commodities trader, in 2013, he was a big man – “Big Mick,” they called him. He topped out at 317 pounds and had developed Type 2 diabetes. In the interests of survival, he launched a hostile raid on his own girth. Today, Big Mick is on the verge of skinny, at 196 pounds, a downsizing so successful that he no longer has to take diabetes medications.

I ask him how he did it. “You eat less, exercise more, and stick to it,” he says. “I took up cycling and I love it.”  His day job has shrunk too, even more so. At its peak just before the 2008 financial crisis, Xstrata, which bought Canada’s Falconbridge Ltd. in 2006, had a market value of about $85-billion (U.S.), making it the fourth- or fifth-largest mining company in the world, with almost 70,000 employees and contractors.

Today, he runs X2 Resources, which has 10 employees and zero assets other than $4-billion of investor capital, some of it from Canadian pension funds, sitting idly in the bank.

X2 was launched a year ago and has been shopping for mining assets or operating companies, but has come up short. Mr. Davis admits he is finding it harder to buy now than in the previous decade, when he spent $35-billion on 40 rapid-fire acquisitions in one of the greatest bull runs in history. “We’ve given some people an expression of interest,” he said. “I expect to do a deal this year.”

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Can Mick Davis build another Xstrata? – by Stephen Bartholomeusz (Business Spectator – March 6, 2015)

http://www.businessspectator.com.au/

Mick Davis’s announcement overnight that his X2 Resources has raised $US5.6 billion could be a signal that he is about to begin the much-anticipated reprising of the game-plan that created Xstrata. Or else it could be another false dawn.

X2 announced that it had successfully completed its “initial” capital raising, securing $US5.6 billion in equity capital from a small number of “word-class” investors to create a new “mid-tier diversified” mining and metals group.

It described the raising, which comprises $US4 billion in committed capital available for immediate drawn-down and $US1.6 billion in conditional equity, as “one of the largest ever first-time raises by a private vehicle”.

The uncertainty about what the raising foreshadows relates to three earlier announcements by X2. The first, in 2013, not long after the merger/takeover of Xstrata by Glencore that saw Davis ousted as chief executive, announced that Noble Group and TPG had agreed to invest $US500 million each in X2.

The second, in March last year, was an announcement that X2 had secured $US2.5 billion in committed capital and another $US1.25 billion in conditional capital from five investors, including Noble, TPG, sovereign wealth and pension fund investors.

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Former Xstrata CEO poised for a comeback with X2 Resources – by Eric Reguly (Globe and Mail – March 4, 2015)

The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

Mick Davis, the mining boss who sold Xstrata to Glencore for $50-billion (U.S.), has reached $5.6-billion in investor capital to finance a mining investment campaign that will almost certainly turn his comeback vehicle, X2 Resources, into an operating company this year.

X2 announced the finish of its capital raising effort from a roster of international “blue chip” investors Wednesday night in London. If debt leverage is added to the figure the new company would have considerable firepower, making it capable of buying assets or operating companies valued at $15-billion to $20-billion.

The $5.6-billion includes $4-billion in committed equity capital that can be spent immediately, and US$1.6-billion that can be spent under certain conditions. A year ago, X2 announced that it had raised $3.75-billion in unconditional and conditional capital, none of which has been spent. The new figure includes the amount raised last year.

The capital comes from 20 investors, of which only two have been identified. They are Noble Group of Hong Kong, one of the world’s largest commodities trading and infrastructure companies, and TPG Capital, the private American investment firm with $65-billion in capital under management. The others are sovereign wealth funds and pension funds, several of which are Canadian.

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Ex-Xstrata CEO Seeks Second Act With Vale’s Nickel Assets in Mind – by Firat Kayakiran, Dinesh Nair and Jesse Riseborough (Bloomberg News – January 14, 2015)

http://www.bloomberg.com/

Mick Davis, who built Xstrata Plc into one of the world’s biggest mining companies, is trying to do it again.

Davis, a 56-year-old South African, is considering a bid for the nickel business of Vale SA (VALE), the world’s top producer, according to people with knowledge of the situation. Davis’s investment vehicle X2 Resources values Vale’s nickel business at $5 billion to $7 billion, said two of the people, who asked not to be identified because the negotiations are private.

Through a decade of 40 mergers and expansions, the onetime cricket umpire Davis increased Xstrata’s market value more than 80 times to $50 billion, and became the world’s biggest exporter of power-station coal. After it agreed to be acquired in 2012 by its largest shareholder Glencore International Plc in a $30 billion deal, Davis was to lead the combined company. The power-sharing agreement collapsed when Glencore Chief Executive Officer Ivan Glasenberg demanded the title.

Davis’s X2 has since raised about $4.8 billion from equity investors and has been hunting for assets to buy from the world’s largest miners such as Vale, BHP Billiton Ltd. and Anglo American Plc.

“Mick Davis is a strong and a driven individual who has been very successful,” said Vince Gauci, who was managing director of M.I.M. Holdings Ltd. when Xstrata acquired the Australian metals and coal producer for $3 billion in 2003. “I’ve no doubt that he’s still got the fire in his belly to start again.”

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Ex-Xstrata CEO Davis Considering a Bid for Vale Nickel Assets – by Firat Kayakiran, Dinesh Nair and Jesse Riseborough (Bloomberg News – January 13, 2015)

http://www.bloomberg.com/

Mick Davis, former Xstrata Plc chief executive officer, is considering a bid for Vale SA (VALE5)’s nickel business, according to people with knowledge of the situation.

Davis’s investment vehicle X2 Resources values Vale’s nickel business at $5 billion to $7 billion, two of the people said, who asked not to be identified because the negotiations are private. There hasn’t been any formal negotiation between X2 and Vale about the assets yet, they said.

X2 has raised about $4.8 billion from equity investors including Asia’s largest raw-materials trader Noble Group Ltd. (NOBL), private-equity fund TPG Capital and sovereign-wealth and pension funds to create a mid-tier mining company. It has been hunting for assets to buy from the world’s largest miners such as Vale, BHP Billiton Ltd. (BHP) and Anglo American Plc.

Vale’s American depositary receipts, the equivalent of one ordinary share, erased losses and rose 1.4 percent to $8.67 at 2:35 p.m. in New York.

Vale, which as well as being the world’s leading iron-ore miner is also the biggest nickel producer, has already said it may try to raise cash from the business.

The company is considering the sale of a minority stake in its metals-producing unit, which it valued at as much as $35 billion, in an initial public offering, Chief Financial Officer Luciano Siani said Dec. 2. The unit includes copper as well as nickel.

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Davis sees IPO for X2 at future point – by David McKay (Miningmx.com – July 2, 2014)

http://www.miningmx.com/

[miningmx.com] – WHEN NEWS FILTERED through last year that Mick Davis was planning to establish his own firm, the natural assumption was that he was joining the ranks of other former mining executives in private equity.

Davis’s former banker, for instance, Ian Hannam has established an investment firm of his own aimed at capitalising on opportunities in Zimbabwe. There are a bunch of others.

Then in April, Ivan Glasenberg and Mark Cutifani, the CEO of Anglo American, told Reuters at the FT Commodities conference that private equity and mining was like mixing oil and water.

Private equity gears up assets with steady cash flows which are used to repay interest. Then the asset is sold for a higher value after a six to seven year investment period.

“The problem with the commodities space, if you have a high gearing (debt), is that you are not running Boots pharmaceutical where you have a pretty constant earnings base,” said Glasenberg. “In mining you just don’t know your earning base.” Davis, however, said X2 Resources differs from private equity.

“X2 Resources’ proposition is that of building another diversified mining company.

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What Mick [Davis] wants – by David McKay (Miningmx.com – June 30, 2014)

http://www.miningmx.com/

[miningmx.com] – ONE OF THE best quotes about Mick Davis, the founder CEO of Xstrata, comes from former JP Morgan banker Ian Hannam who assisted with a number of transactions for Davis.

He said: “There are four people who claim they brought Billiton to London: [Brian] Gilbertson, myself, Adrian Coates [a well-known banker in London, then at HSBC] and Davis. The answer is – it was Davis. He saw the opportunity and managed to persuade Gilbertson that it would create a platform to build a new company to rival Rio [Tinto]”.

Since the listing of Billiton in 1997, Davis has been the primum mobile of some of the highest profile mining deals in London, including Billiton’s merger with BHP, a string of transactions during the decade or so during which Xstrata was built into the fourth largest diversified miner, Xstrata’s ultimately frustrated ‘merger of equals’ with Anglo American, and finally, the marriage of Xstrata to Glencore in 2013, the largest transaction in the City that year.

The Glencore-Xstrata combination was also described in terms of ‘a merger of equals’ when first unveiled in 2012. The fact that the final arrangement ended with the departure of Davis, and nearly all of his senior management team, suggests that in global mining finance, mergers are illusory, created to save the actors from over-paying for those acted upon.

That’s why it’s so tempting to style Davis’s swift return to the UK’s corporate scene as head of X2 Resources as an act of ‘unfinished business’, although, Davis was off stage so briefly, it’s hard to describe X2 Resources as a return so much as a continuum.

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X2 boss Davis calls next supply deficit – by David McKay (Miningmx.com – July 1, 2014)

http://www.miningmx.com/

[miningmx.com] – THERE’S A MOMENT when X2 Resources founder, Mick Davis, can’t contain a smile. Asked whether there was any mischief in the naming of his new company, he replied: “Maybe just a bit of fun.”

The psychology of naming, however, runs deep. It’s no coincidence, for instance, that a year after completing the ‘merger’ of Glencore Xstrata, the combined company should resolve at its recent annual general meeting to rename the company Glencore plc. The merger of equals was long dead, but the name change sealed it.

Said Hanré Rossouw, who is head of commodities for frontier and emerging markets at Investec Asset Management of the decision to call Davis’s new venture ‘X2’: “I think the name says it. It’s the Xstrata model rebooted”.
Yet is the market similarly positioned for another Xstrata?

“I think Mick has got a good track record,” said Rossouw. “He brought change to the industry by introducing a more financial focus. Before that you still had mining engineers running companies.

“The only disadvantage is that because Mick has had success, so it may become more difficult to get the same kind of deals. In the past, he seemed to come out of nowhere”. Rossouw was a CFO of Xstrata Alloys before joining Investec in Cape Town.

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