China Mining United Fund (CMU), a Beijing-based natural resource-focused private equity firm, plans to raise RMB10 billion (€1.15 billion; $1.47 billion) for a mining-focused fund, a spokeswoman for the firm confirmed to PEO's sister web site PEI Asia.
The fund, which already held a first close on RMB500 million last year, will invest in gold, iron ore and other metals-related projects. The firm is targeting a second close on RMB3 billion to RMB5 billion, although it doesn’t have a specific timeframe for this, according to the spokeswoman.
CMU is approaching both domestic and foreign investors for funding, the spokeswoman said. As foreign LPs are not yet been allowed to invest in RMB-denominated funds, the firm may consider setting up a parallel vehicle to raise money from foreign investors, an investment professional at CMU stated.
CMU, which was established in May 2009, has already invested in both domestic and foreign mining companies and projects, as well as precious metals, non-ferrous metals, non-metal mines, and other forms of energy resources.
“We are investing in whatever China is short of – potash, cobalt, uranium, chromium, copper, gold, silver, oil, coking coal and iron ore,” a spokesperson for the firm stated in an email to Bloomberg.
In China, the fund will focus on investments in unlisted companies, according to the investment professional. However, outside of China, investments will tend to be in public companies after permission has been sought from China's Ministry of Commerce. CMU has already purchased stakes in Brazil’s Potash Corporation, and Canadian companies Allana Resources, Excelsior Energy, and Murgor Resources according to its website.
In terms of allocation, it is expected that a larger percentage of the mining fund will be allocated to Chinese companies, but no specific breakdown has been disclosed.
CMU is led by Zhi Zheng, who is also chairman of recreation company Zhengda Group. Its management team also includes Zheng Zhou, founder of real estate company SkyOcean Holding, and Li Feng, who was previously the Asia Pacific director of Royal Bank mutual funds under the Royal Bank of Canada Financial Group.
CMU also set up another fund focused on clean energy in December 2009, which has RMB1 billion target. The firm is one of the first mining investment firms to set up RMB-denominated funds, according to its website.