Mining-focused private equity fundraising has soared in the last two years amid a dearth of traditional sources of retail capital and bank debt in the sector

Alec Macfarlane

Appian Capital Advisory, the metals and mining-focused private equity firm founded by former JP Morgan Cazenove banker Michael Scherb, has closed its debut fund, joining a rush of private equity funds looking to profit from the dearth of traditional sources of capital in the sector.

The London-based firm said Wednesday that it has closed its Appian Natural Resources Fund with commitments of $375 million.

The Fund launched in January 2013 and was oversubscribed after six months of fundraising, according to Michael Scherb, founder and general partner at Appian.  The fund received around $1 billion of interest, although the firm set a hard cap of $375 million from a small group of investors.  The firm also has access to an additional pool of capital of around $375 million through its network, which may be used to participate in co-investment opportunities alongside the main fund.

The fund invests between $10 million and $100 million in small to medium-sized assets or companies in the metals and mining sector in Latin America, North America, Africa and Europe.  In August last year Appian agreed its first deal, an investment in Red Eagle Mining, a Vancouver, Canada-based company with mining projects in Colombia. The firm is also set to announce a further two deals in Africa and Latin America in the coming months, according to Mr. Scherb.

The fund is looking to more than double its investors’ money, Mr. Scherb said.  Mercury Capital Advisors acted as the placement agent for the fund.  Appian was set up in 2012 by 32 year-old Australian national Mr. Scherb, who previously worked in the investment banking team foucsed on mining at JP Morgan Cazenove in London.  He has been involved in a number of high-profile mining-related M&A deals in the past, which include advising Rio Tinto on its defence against a $153 billion unsolicited approach from BHP Billiton.

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The Appian Natural Resources Fund will invest between $10m and $100m in mining companies.

Yolanda Bobeldijk

Appian Capital Advisory, a London-headquartered firm, has held a $375 million final close on its debut fund, which targets investment in the mining and metals sector.

The Appian Natural Resources Fund, which came to market in January 2013, will invest in metals and mining companies or projects in selected regions in Latin America, North America, Africa and Europe.

The firm held a $150 million first close in October 2013 and a $225 million second close towards the end of the year before closing on its target.

Appian’s maiden fund, which Mercury Capital Advisors helped to raise, attracted seven investors from Europe, North America and Latin America. The firm’s founder and general partner Michael Scherb declined to specify which LPs have backed them, but the investor-base “is a pretty well-diversified mix”, he told Private Equity International.

“Raising a first time fund is always difficult in any market, so we are delighted with the support we got,” he said.

The firm will look at deals between $10 million to $100 million with average ticket sizes ranging between $30 million and $50 million. For deals close to a $100 million, Appain will co-invest with some of the LPs in the fund.

“Investors are looking for different ways in playing the commodity space. Private equity makes sense because you are matching longterm capital to a very longterm industry,” Scherb said.

Appian already made one investment from the fund when it backed Columbia-based Red Eagle Mining early last year. For this transaction, it co-invested with Liberty Mutual, a US-based life insurance company, and used seed capital from the partners involved and some seed investors.

Appian, which was established in 2012, was founded by Scherb, a former investment banker at JPMorganCazenove where he focused on the mining sector. Verne Grinstead, one of the firm’s managing partners, also came from JPMorganCazenove, where he was a managing director within the equity capital markets team, while Vincent Jacheet, the other managing partner, spent a decade at Bain Capital as a senior principal.

The remaining three team members of Appian are senior operating partners which all have experience in the mining sector. Appian plans to expand its staff to 14 in the coming months.