Nedlands-based Viburnum launches $300m mining industrials fund with family money on the rise
Nedlands private equity outfit Viburnum has opened a $300 million fund targeting Australian mining tech and services businesses amid a torrent of new capital being deployed by wealthy family offices.
Viburnum Private III is the third fund launched by the firm since it was founded in 2007 and has a mandate to take up stakes in growing mining industrial businesses.
Melanie Hay, who will take over as Viburnum’s managing partner of private equity strategy from co-founder Marshall Allen, said investors were looking for different ways to participate in the energy transition.
“Some of the opportunities over the last couple of years haven’t really generated the returns that were expected,” Ms Hay said.
“Now, I think it is understood about the sheer volume of metals and minerals required to get to net-zero, and that Australia is still one of the best places to get exposure to that.”
An unnamed Perth family office with “roots in WA mining” and an institutional investor from the US have already agreed to invest $150m into the new fund, which is expected to close by early 2025.
Viburnum’s first two funds were mostly taken up by US investors looking for alternative exposure to resources.
This third fund will be the first time in 12 years a “core” Australian investor has come on board, according to Mr Allen, who attributes the increased investment appetite to the rise of family offices in Australia.
“My gut feel is that after COVID, a lot of Australian expats have relocated back to Australia and brought with them a lazy $200 million to a billion dollars. You’d just be amazed at how many small private groups there are,” he said.
Family offices have become a flourishing new force in Australian private equity investment.
According to Ms Hay, this is in part because the asset class as a whole is becoming more widely understood in the country.
“Private equity as an alternative asset class is becoming more mature in Australia. It’s been very well accepted in the United States for decades and decades, but I think it is now becoming more mainstream,” she said.
Since 2019 family offices grew from 7 per cent of investors in private capital to 36 per cent in 2023, recent research by the Australian Investment Council shows.
The cohort has even overtaken Australia’s superannuation sector as a proportion of investors overall.
Viburnum markets an “active ownership” model based on building up companies for growth, via methods such as taking their services overseas to new markets.
“People think private equity is just about coming in, cutting costs. And I think it goes back to the 1980s in the US and and the big leverage buyouts. Private equity ,the whole industry, has moved on… private equity is about growth.”
The fund new is ultimately banking on companies exposed to operations where mining tonnes are increasing, a factor Viburnum believes will continue in order to meet energy transition demands.
“Obviously it’s very newsworthy ro talk about volatility and lithium prices, nickel prices, iron ore prices . . . but the volumes are still going up. So what we do is leverage to the amount of tonnes, not the price.” Mr Allen said.
Another part of his view is that there will be increased demand for companies able to make mining more productive and reduce costs even as commodity prices cool.
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