Trafigura Fund To Invest In Mining Firms

Galena, the fund arm of commodities giant Trafigura, said it had launched a private equity fund for investing in small to mid-sized miners, filling a void left by banks, sister news service Reuters reported. The Galena Private Equity Resource Fund, which has so far raised $275 million, aims to grow to $600 million by year end when it will close to investors, Galena said in a statement.

Banks are more wary about the junior mining market due to the fallout from the European debt crisis and new rules designed to shore up balance sheets. “Small to medium-sized mining companies are finding it harder to access funding in the current economic climate,” fund manager Jesus Fernandez, who has led Trafigura’s investments in mining since 2005, said in the Galena statement. “The new fund provides a mechanism for bridging investor appetite for commodity-linked assets and companies that require capital at a reasonable cost.”

Galena already has $2.5 billion under management and uses its parent’s vast global network in 56 countries to glean local knowledge of commodity supply chains. “The strength of Trafigura is that we can put together different skill sets easily while other private equity funds have to search outside,” said Galena’s head of marketing Maximilian Tomei, adding that the fund would scour for mining opportunities in the Americas, Europe and sub-Saharan Africa.

The fund will focus on coal, base, ferrous and precious metals and Tomei said it was attracting interest from pension funds and U.S. university endowments.

Emma Farge is a correspondent for Reuters in Geneva.