Appian Capital Advisory LLP – an investment advisor to long-term value-focused private capital funds that invest solely in mining and mining-related companies – recently announced the final close of its third fund. Fund III was heavily oversubscribed despite difficult fundraising conditions for the private equity sector, raising its hard cap to $2.06 billion following strong support from both large, new investors and existing top-tier investors globally.
Fund III was Appian’s largest to date, bringing total assets under management to about $4 billion (not including a large co-investment pool) and making the company the largest private equity investor in metals and mining. And it will pursue the same proven strategy as Appian’s first fund (Fund I) and second fund (Fund II), focusing on investments in metals and mining assets and their adjacencies. And Appian’s $375 million Fund I closed in 2014 while its $775 million Fund II closed in 2021. Appian was the potential to invest up to one third of Fund III in credit opportunities in metals and mining and adjacencies, reflecting the company’s growing presence in this sector.
This strong investor interest reflects Fund III’s exposure to key thematics provided by Appian and its investment approach, including inflation protection provided by commodities in the current economic climate; exposure to the energy transition and the shift from oil and gas through investments in key metals including copper and nickel, providing higher rates of return than direct investment into downstream projects; and growing demand for an independent, sustainable and stable supply of critical minerals from car manufacturers, technology companies and other original equipment manufacturers.
Fund III is going to continue to use Appian’s unique technical arbitrage approach from Funds I and II, allowing it to gain a competitive advantage and generate outsized returns for investors. And the company’s leading team has experience from global investment banks and private equity firms, having completed over $200 billion of mining transactions, while the technical team is comprised of industry professionals from major mining companies who have brought over 60 mines into production.
Fund III is building on Appian’s record of generating strong risk adjusted returns by identifying, acquiring and developing undervalued metals and mining assets. And the company focuses on high margin, low cost mines with a high quality resource base where there is potential to add value as the only financial group with the capability to run and operate mines. Plus, Appian brings the technical knowledge of a major mining company, allowing it to partner with management teams to create value by improving development plans and bringing mines into production. This makes the capital especially attractive by providing miners with technical expertise and support in addition to finance.
Fund III is targeting mid-tier opportunities, prioritizing profitability over scale for generating maximum returns. And investment in energy transition commodities will be balanced by investments in precious metals. With a global remit, Fund III is going to focus on countries with proven geology, supportive governments and a robust legal framework where Appian has existing operations or experience in operating.
Fund III already deployed 10% of its capital, using Appian’s world class sourcing and execution techniques to secure three investments. And these include a joint venture with TSX-V listed Osisko Metals to develop the Pine Point zinc-lead project in Northwest Territories, Canada; a partnership with Detronic Energia to develop 62.4MWp of solar power plants in Brazil; and acquiring majority ownership of the operating underground Rosh Pinah zinc-lead mine in Namibia.
Investors also expressed substantial interest in co-investments, which would significantly expand Fund III’s capabilities, demonstrating investor confidence in Appian and the fund.
The fundraising positions Appian well for its next phase of growth and builds on the success of Funds I and II. And as the largest private equity investor in metals and mining globally, Appian has a portfolio overseeing nearly 7,000 employees, 75 experienced professionals and a leading management team, with a number of recent high-profile appointments including Ignacio Bustamante from Hochschild as Head of Base Metals for Appian.
Appian maintains a strong focus on ESG, with the highest environmental, social and governance standards as crucial elements within all investment opportunities and commitment to ensuring all portfolio companies adhere to leading international standards. And the company has established the Appian Way Charitable Foundation to support the regions in which its operations are based.
KEY QUOTE:
“We are thrilled to have closed Fund III, with very strong support from existing and new investors. Fund III provides exposure to key trends including inflation protection, the energy transition and the need for an independent and stable supply of critical minerals to support the shift away from oil and gas. As we continue to see increasing interest in metals and mining, Fund III will build on the successful track record of Funds I and II, deploying our unique operating model to bring mines into production and generate outsized returns for our investors.”
- Michael W. Scherb, Founder and CEO of Appian
