Mick Davis' X2Resources Ltd. is restructuring after two key investors pulled outof the US$5.6 billion private equity fund, TheAustralian reported July 16, citing "people familiar with the matter."
The sources told the publication that commodities tradinghouse Noble GroupLtd. has reneged on its US$500 million commitment, and U.S. privateequity firm TPG will not renew its US$500 million commitment when it expires inthe first quarter of 2017.
X2 Resources was launched in 2013 to pick up bargains in thepressured mining sector, but while the fund has reportedly many assets, it hasfailed to execute any deals.
According to TheAustralian, this is because some key investors had the power to blockproposed investments, which made it difficult to get deals done.
The people familiar with the matter told the publication X2Resources' other investors include Abu Dhabi Investment Council and threeCanadian pension funds — PSP Investments, Ontario Teachers' Pension Plan andCaisse de Depot et Placement du Quebec — as well as a number of smallerinvestors.
The six main investors each committed US$500 million, thesources said.
According to the people familiar with the matter, X2Resources is currently restructuring and investigating whether it shouldcontinue to allow some larger investors to have the power to block potentialdeals, which have included coal asset buys because of the increased negativeattention the commodity is getting as a pollutant.
One of the sources told TheAustralian that other investors are also in negotiations on issuesincluding changing their financial commitment to the fund, and it is possiblemore investors may back out of their commitments.