Waterton hits $1bn hard-cap for Fund II

The Canadian private equity firm surpassed its $750m target for its second flagship fund.

Toronto-based Waterton Global Resource Management has closed its second flagship fund on $1 billion, according to a statement.

Waterton Precious Metals Fund II launched in 2013 with a $750 million target and a $1 billion hard-cap, according to a source with knowledge of the fund. The fund held a first close last July on $300 million and a second close on $600 million in October, according to Private Equity International’s Research and Analytics division.

Fund II has a small investor base of large global sovereign wealth funds, pension funds and endowments, according to the source. The fund has made five investments to date in production and late-stage development assets in primarily in the US and Canada. Atlantic-Pacific Capital acted as the placement agent for Fund II.

Waterton focuses on three main metals: gold, copper and silver. Investments are made through structured loans, joint ventures, asset purchases, royalty arrangements and majority or minority acquisitions. The firm deploys between $10 million and $250 million for each investment, according to its website.

Waterton’s debut fund closed on $200 million in 2010 without using a placement agent, according to the source.

Investing activity in the mining and metals sector has declined last year. GPs in the sector completed 702 deals worth a combined $87.3 billion in 2013, down from 941 deals totaling $104 billion in 2012 and 1,008 deals totaling $162.4 billion in 2011, according to an EY report from earlier this year. The report attributed part of the decrease to unmet price expectations and volatile commodity markets.

“[W]e’ve gone from a bull market to a bear market,” Waterton managing partner and chief executive officer Isser Elishis told PEI. “Valuations have come down. Today we’re closer to being able to reconcile what people believe they should receive for their projects and what we’re willing to pay for them.”

North America remained the second most targeted region for mining and metals M&A activity, after Europe, according to EY. Canada was the most acquisitive country by deal value, which rose from $2.2 billion in 2012 to $6 billion in 2013, the report said.

Waterton was founded in 2009 and is led by chairman James Hennessy, who was previously the president and chief executive officer of ING Mutual Funds, and Elishis, according to the firm’s website.