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Mining firm ACG is to check the urge for food for London’s capital markets because it seeks to lift $300mn to accumulate two mines in Brazil — a deal underscoring rising curiosity from carmakers and traders in battery metals.
ACG, London’s first mining particular objective acquisition firm or Spac, plans to accumulate the nickel and copper mines in a $1.1bn transaction already backed by Swiss miner Glencore, funding fund La Mancha and carmakers Volkswagen and Stellantis, which have every invested $100mn
“London is ideal for us” and stays “the prime spot for mining firms” to lift capital, mentioned ACG chief govt Artem Volynets, as he ready for the launch of the roadshow for the fundraising on Monday.
“There’s a substantial amount of experience amassed right here among the many traders who’ve been following mining shares,” added the previous chief govt of En+ Group.
The fundraising, which Volynets describes as extra like an preliminary public providing than a Spac, will likely be a litmus take a look at for pure sources traders and comes at a difficult time for the London market.
The latest $7.5bn IPO of WE Soda was deserted owing to poor investor curiosity. In the meantime, some London-listed firms are planning to maneuver to New York’s market to reap the benefits of larger valuations.
“Everyone is aware of the capital markets are powerful in the mean time, the IPO market has been troublesome for 2 years now. All of us go into this, eyes broad open,” mentioned Patrick Evans, managing director at Citi, an adviser on the deal.
Whereas different mining firms have criticised European traders for being too targeted on environmental, social and governance considerations (ESG), Volynets mentioned he welcomed the deal with this sort of standards.
“We provide low-carbon steel models, that are produced with first-in-class ESG traits,” he mentioned. “That resonates with the kind of traders and the temper in London.”
The deal, through which ACG will purchase two mines from personal fairness group Appian Capital, additionally highlights how automotive teams are making direct mining investments, one thing unprecedented even a couple of years in the past.
Volkswagen, by way of its subsidiary PowerCo, is investing $100mn within the deal as a prepayment for future nickel provided by the mines.
Stellantis, whose manufacturers embody Fiat Chrysler and Peugeot, has invested $100mn instantly into ACG.
The Santa Rita mine in south japanese Brazil produces nickel sulfide, whereas the Serrote mine in japanese Brazil produces copper and gold.
As western governments grow to be involved over China’s dominance of the important minerals used to provide electrical car batteries, carmakers have grow to be extra proactive in securing battery metals.
“The worldwide provide chain is breaking apart, and segregating into the japanese provide chain and the western provide chain,” mentioned Volynets. “And we’re very a lot on the forefront of that, supplying into the western provide chain.”
Citi’s Evans mentioned the fixed-price fundraising deal, with vital cornerstone traders already signed up, has been structured in a option to minimise dangers in a troublesome market.