Advantages of Investing in Mining via Private Equity Funds
Investing in mining through private equity funds offers significant opportunities as natural resources become scarcer, driving up asset values. The sector has seen substantial growth in fund raises, especially from China's market, with top funds managing billions in assets. While mining investments can be volatile, strategic allocation in this sector can be highly profitable for institutional investors. As natural resource scarcity increases, the outlook for mining investments remains promising, making now an opportune time to consider private equity opportunities in mining.
Advantages of Investing in Mining via Private Equity Funds
Private equity funds differ significantly from hedge funds, primarily because hedge funds are offshore investment vehicles managed privately, with fewer than 100 investors. In contrast, private equity funds typically involve larger sums and investors with substantial assets outside these funds. These investments span sectors such as energy, mining, stocks, and bonds, with mining attracting considerable capital pooling.
Historically, in 2016, around 74 funds raised approximately $60 billion for natural resource investments. By 2017, this number jumped to 252 funds raising $105 billion, with projections indicating an additional $6 billion in 2018.
- China's market led mining fundraising, aiming for $3 billion, while US-based energy and mineral groups anticipate raising $4 billion.
- Mining investments can be volatile, with no guaranteed returns. The top private funds in the sector include:
- Resource Capital Funds in Denver, raising $3.1 billion
- Orion Resource Partners in New York, with $2 billion
- Waterton Global Resource Management in Toronto, with $1.9 billion
- EMR Capital in Grand Cayman, raising $1.3 billion
- The Sentient Group, also in Grand Cayman, raising $1.3 billion
- Overall, diversified funds managing about $12.3 billion are anticipated to channel a significant portion into mining investments.
In 2016, 1,228 funds amassed $602 billion, and the total investments in mining could reach approximately $4.5 trillion. However, according to private capital tracking reports, securing new capital remains challenging, indicating a cautious environment for fund managers.
As natural resources become scarcer, the value of mining assets is expected to appreciate, making future investment days particularly promising.
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