Some good signs coming out of the mining industry with the value of deals being done rising in the last quarter!
For full details, few the article below.
Fewer mining deals but transaction pipelines building
London, 14 November 2014
There were fewer deals but higher deal value in the global mining and metals sector during Q3 2014, amid signs of transactions momentum building, according to EY.
EY’s quarterly analysis shows 119 deals completed in Q3 2014 with total deal value of US$16.2b. Deal volume was down 17% but total deal value was up 51% on Q2 2014, largely due to the completion of Glencore’s US$7.0b divestment of Las Bambas.
EY Global Mining & Metals Transactions Leader, Lee Downham, says:
“Mining and metals transactions activity is in something of a holding pattern. Deal pipelines are still very strong but are moving slowly”.
“As has been the case through most of this year, we are seeing signs of momentum slowly building but there is little urgency to complete deals quickly,” he says.
“We are starting to see more strategic acquisitions take place again, particularly amongst mid-tier companies, and there has been some renewed interest in deals in frontier regions, particularly in the gold and copper space while valuations are low.”
The 83 mining and metals sector respondents to EY’s latest Capital Confidence Barometer also points to increasing M&A activity, with 46% expecting to pursue an acquisition in the next 12 months, nearly double that six months ago and the highest level in two years.
The Barometer shows mining and metals companies are also confident in key deal metrics, including the likelihood of closing acquisitions (60%, up from 26% six months ago); the quality of acquisition opportunities (60%, up from 34%), and; the number of acquisition opportunities (67%, up from 42%).
Q3 2014 deals in mining and metals
119 deals in Q3, down 17% on Q2 2014 and down 34% on Q3 2013
Q3 deal value US$16.2b, up 51% on Q2 2014 and up 39% on Q3 2013
January-September 2014 YTD 414 deals with total deal value US$34.1b, versus 566 deals with total deal value US$65.4b for the same period in 2013
Assets in frontier markets accounted for 21% of cross-border deal value in Q3 2014, up from 3% in Q2 2014
Copper assets accounted for nearly half (46%) of all Q3 2014 acquisitions by deal value
Q3 2014 capital raising in mining and metals
Total capital raising in Q3 2014 was US$64.4b, down 29% on Q2 2014 but up 52% on the same period in 2013
Refinancing, along with discounted rights issues in the coal, iron ore and steel sectors, accounted for a significant proportion of Q3 funding activity
Five IPOs in Q3 2014 raised US$49m, with 12 IPOs in January-September 2014 YTD raising US$1.3b
An 81% increase in follow-on equity issues to US$4.7b for Q3 2014 masked ongoing distress, with a number of significantly discounted rights issues made during the quarter
The original article can be found here