Mick Davis, the former head of Xstrata who was kicked out after the $70 billion merger with Glencore completed in the spring of 2013, announced that his new venture (X2 Resources) just raised an additional US $1 billion. His warchest now sits close to US $5 billion with US $3.3 billion available for immediate withdrawal and another US $1.5 billion of conditional equity.
The 56 year old South African-born accountant left Xstrata with $135 million in cash and stock options after the merger with rival Glencore.
“With almost $5bn in equity and access to significant additional debt funding, X2 Resources is uniquely positioned and we are currently reviewing a number of opportunities in the metals and mining sector,” said Mr Davis in the release. “We will build on the team’s unparalleled track record of acquiring and integrating assets and supporting the management teams of acquired businesses to create value.”
Davis and his handpicked team of former Xstrata executives have been scouring the globe for large and profitable mining assets that could fit within their investment mandate.
Mick “the Miner” Davis (or “Big Mick”) as he is known was the CFO of Billiton and helped formulate the merger with BHP to create one of the largest mining companies in the world.
His theory on commodities which has guided his career has always been “stronger-for-longer” which is based on the belief that the developing world – China, India and sub-Saharan Africa – will continue to move into an urban setting creating huge demand for base metals, especially copper and coal.
With majors like BHP and Anglo American spinning off and/or selling non-core assets, the market is right for a transformational deal, especially under the guidance of Davis.
Davis grew Xstrata from $500 million when he took over in 2001 to over $30 billion 12 years later when he merged it into Glencore.
X2 Resources was founded by Davis in September 2013 with five cornerstone investors that each committed to invest $500 million and ear-marked an additional $250 million each that was conditionally available. That investor group included the Hong Kong-based commodities trading house Nobel and private equity fund TPG.
The X2 team is comprised of most of the former Xstrata executives including: the former CFO Trevor Reid, Andrew Latham who was the head of business development, Benny Levene who was the chief legal counsel, Thras Moraitis who was the head of strategy and Ian Pearce who was the CEO of Xstrata Nickel.
Like Davis, Regent raised significant capital for a private investment vehicle after he was ousted from his CEO position.
The two mandates are similar, although Davis has the willingness and ability to strike a much larger deal than Regent.
With Regent making the first move and Davis’ rival Ivan Glasenberg toying with the idea of a huge $160 billion merger between his Glencore and Rio Tinto, perhaps “the Miner” is getting set to make his first acquisition.