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Capital deployment into junior mining set for Q3 start – Aluwani

Aluwani Capital Partners CEO and founder Sibusiso Mabuza

Aluwani Capital Partners CEO and founder Sibusiso Mabuza

Photo by Dylan Slater

29th May 2018

By: Martin Creamer

Creamer Media Editor

     

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JOHANNESBURG (miningweekly.com) – The first close of capital acceptance is in sight for the new junior mining fund launched earlier this year by Aluwani Capital Partners, the independent black-owned investment management business that aims to make a lasting impact in South Africa and the rest of the African continent.

Capital acceptance from investors will begin on July 1 and close on September 30.

“We’ve done our roadshow and we’ve got a good idea of the type of investors that are going to come in. At this stage, the main one is external, but we’ve also received good local feedback. We’re looking to deploy the first capital in the third quarter of this year,” Aluwani CEO and founder Sibusiso Mabuza told Mining Weekly Online in an exclusive interview on Tuesday.

Incoming funds have been capped at R5-billion for investment in potentially eight to ten opportunities, with coal at the top of the list and including iron-ore and vanadium.

“We think there are nice opportunities for our clients to make good returns, but we also think the stars are aligned in a way because South Africa needs investments of this type right now. If we can create jobs, if we can improve the macroeconomic environment, we can also feel good about the investments that we make. We can also be a lot more responsible about our impact on the environment. It’s been an interesting learning curve,” said Mabuza.

Good quality coal opportunities are presenting themselves in the Waterberg region and consideration is being given to consolidating operations so that meaningful investment can be forthcoming.

Opportunities involving lower coal qualities have also been identified in Mpumalanga, where consolidation of small participants is envisaged.

“We’ve been surprised by the number of players looking for capital. Ideally, we want partners that we can capacitate to run the operations and then to buy us out, because ultimately our clients are not permanent mining investors. They’re investing because the opportunity set makes sense. So, we’re always thinking about an exit strategy, while the existing miners are looking for the upside almost in perpetuity,” said Mabuza, who envisages end-to-end, pit-to-port investment involving mainly exportation of coal to China and India.

Aluwani’s investments will, in the main, be a mix of private equity and debt, with exit envisaged after seven to ten years. With opportunities found to be too small for private equity positions, the company will proceed with appropriate debt positions.

To mitigate risk, controlling stakes will be targeted until the company is comfortable that its partners are able to take the companies forward on their own.

The 42-employee Aluwani, which has more than R57-billion assets under management, was created out of the unbundling of Momentum Asset Management in 2015, when Mabuza, 42, a former CEO of Momentum Asset Management and then CEO of MMI Investments, created Aluwani, a fiduciary business that invests on behalf of clients and in which MMI is a minority shareholder.

In February, its mining fund was launched on the sidelines of the Mining Indaba in Cape Town to make capital accessible to mainly capital-constrained junior mining companies.

“We were established on a foundation of strong partners that are committed to building a sustainable and transformative business,” says the website of the company that will operate its mining fund in partnership with VM Investment Company and the Ntonga group.

“We seek to provide sustainable risk adjusted returns over the long term,” adds the independent owner-managed black-owned investment business.

As an asset management business, Aluwani accepts investors capital and invests it on their behalf, either in listed stock market opportunities or unlisted opportunities with the intent of giving investors an outperformance over the target return that they have in mind.

The company, which is registered with the Financial Services Board, does not invest for its own balance sheet, but, as a fiduciary business, it invests on behalf of clients, without co-mingling any of its own capital with that.

Edited by Creamer Media Reporter

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