UPDATE: Vallar's London Flotation Exceeds Views -Rothschild

9th Jul 2010 17:27

(Adds further comment from Rothschild) By Alex MacDonald Of DOW JONES NEWSWIRES LONDON (Dow Jones)--The London-listed flotation of Vallar PLC, a mining investment vehicle set up by a team of veteran mining executives and investors, has exceeded expectations, the investment vehicle's co-leader Nathaniel Rothschild said Friday. "We are extremely pleased by the quality of the investor base and the belief in the overall thesis [of Vallar's investment strategy]. It has exceeded our expectation in a very difficult market backdrop," Nathaniel Rothschild, former co-president of Atticus Capital and scion of the Rothschild banking dynasty, told Dow Jones Newswires in an interview. He said the listing on the London Stock Exchange's main board exceeded his expectations by more than 10%. Vallar placed 68.7 million ordinary shares at a price of GBP10 per share, resulting in gross proceeds of GBP707.2 million compared to initial expectations of GBP600 million. The shares will trade unconditionally on the London Stock Exchange's main board on July 14. The Jersey, U.K.-registered company plans to use the funds to make a significant single investment in the mining sector. It has the ability to raise enough funds to purchase a company worth between GBP2 billion and GBP5 billion. Such a transaction would certainly place Vallar in the FTSE-250 index and possibly the FTSE-100 index as well, Rothschild said. Investors in the IPO included "blue-chip" U.S. and U.K. institutions, a couple of sovereign wealth funds and a number of high net worth executives from the metals and mining space, Rothschild said. Vallar also attracted a handful of big, multi-strategy institutional investors, he added. Vallar will make its first investment within a two-year time frame and plans to focus on purchases where it can leverage its team's expertise. It's first purchase is likely to be in stable countries such as North and South America or Australia. Vallar is unlikely to make an acquisition in Russia or Africa from the start, he said. From a commodity perspective, the company is "relatively agnostic" about the type of commodity it plans to invest in although Vallar prefers those commodities which are in high demand from China, Rothschild said. "Any commodities that China doesn't have, we like," he noted. The recent drop in asset valuations has created a unique opportunity for Vallar to invest in a mining company cheaply. Valuations have dropped by 20% to 30% since the IPO process started, he said, noting that "our timing [for the IPO] is very, very good." Valuations dropped because "people are worried about the reigining in of stimulus packages in Europe" he said. But Chinese demand remains robust and the "Chinese requirement for commodities is obviously there," he noted. Vallar plans to differentiate itself from large diversified miners such as Rio Tinto PLC (RTP) and BHP Billiton Ltd (BHP) by adhearing to an industrial logic in its investments, Rothschild said. -By Alex MacDonald, Dow Jones Newswires; +44 (0)20 7842 9328; [email protected] (END) Dow Jones Newswires July 09, 2010 12:27 ET (16:27 GMT)