Objective Capital Global Mining Investment Conference - Fund Manager's View: Mark Brown

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Fund Manager's View - What criteria must miners now meet to be attractive for investment?
Objective Capital Global Mining Investment Conference
30 Sep 2009
Fund Manager's View - What criteria must miners now meet to be attractive for investment?
by Mark Brown, Barclays Capital

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Objective Capital Global Mining Investment Conference - Fund Manager's View: Mark Brown

  1. 1. London Global Mining Investment Conference<br />12.20 A Fund Manager’s View - what criteria must miners now meet to be attractive for investment<br />Mark Brown<br />Managing Director<br />Head of Barclays Natural Resource Investments<br />Stationers Hall, London<br />Wednesday 30th September 2009<br />www.ObjectiveCapitalConferences.com<br />
  2. 2. Fund Manager&apos;s View What criteria must miners now meet to be attractive for investment?<br />Mark Brown<br />Managing Director, Global Head of BNRI<br />September 2009<br />trant:<br />MAIN COVER STYLE<br />
  3. 3. Fund Manager’s view<br />3<br />“What Criteria must miners now meet to be attractive for investment?”<br />… OUR view, not MARKET view<br />
  4. 4. Barclays Natural Resource Investments<br />4<br />Mining<br />(upstream)<br />Oil and gas<br />(upstream)<br />Power<br />(including renewables)<br /><ul><li>Invest Barclays money… recently opened to 3rd party capital
  5. 5. Private equity investors; invest in private companies
  6. 6. Investing in global natural resources since 2006</li></li></ul><li>Natural Resources opportunity<br />5<br />World class commodities franchise<br />Focus on natural resources private equity<br />Emerging markets expertise<br />Relative lack of competition<br />
  7. 7. How do we invest – what are our key criteria?<br /><ul><li>Key criterion - PEOPLE
  8. 8. We are management led
  9. 9. Even “good” assets do not run themselves</li></ul>6<br />…so what do we look for in a management team?<br />
  10. 10. What do we look for in a management team?<br />7<br />Alignment<br />Aligned with management from the outset<br />Skin in the game<br />Aligned with management from the outset<br />Clear business plan to make money<br />We ask a lot of questions<br />
  11. 11. What do we look for in a management team?<br />8<br />Proven track record<br />We will do a lot of referencing<br />An angle<br />Experience, geographical focus, commodity insight…<br />
  12. 12. The attractiveness of an investment is driven by management<br />Committed management<br />Competitive advantage <br />Operational enhancement<br />‘Inside track’<br />Sensible risk adjusted returns<br />Exit strategy within 5-6 years <br />Opportunities for a nimble private company<br />9<br />Alignment<br />Skin in the game<br />Clear business plan to make money<br />Proven track record<br />An angle<br />
  13. 13. Criteria we don’t like<br /><ul><li>Build the new BHP Billiton
  14. 14. Bet on copper being $5/lb for the next 10 years
  15. 15. Management won’t co-invest despite “dead-cert” 4x deal
  16. 16. Build $4bn mines
  17. 17. Own mine for 30 years
  18. 18. Back a team… who have not visited the country they target</li></ul>10<br />
  19. 19. Criteria we don’t like<br /><ul><li>Team that just wants a day job
  20. 20. Team that just wants a hobby
  21. 21. Acquire 10 x 5% stakes in public companies
  22. 22. Compete in auctions
  23. 23. No ‘inside track’
  24. 24. Team that ramps up a share price in the public markets</li></ul>11<br />
  25. 25. We’ve historically found more oil and gas teams with the criteria we look for<br />10 teams backed to date but only 1 mining team (US Coal)<br /> …despite seeing over 200 mining management teams!<br />Why….?<br /><ul><li>Private equity model more proven in oil and gas?
  26. 26. Mining industry reliant on public markets?
  27. 27. …are our criteria too difficult in mining?</li></ul>12<br />
  28. 28. Should we be backing more management teams in mining<br />…We’d like to!<br />13<br />
  29. 29. 14<br />trant:<br />Use like a pause or statement slide<br />Questions&Answers<br />
  30. 30. Contacts<br />Mark Brown+44 (0) 20 7773 3281mark.brown@barcap.com<br />15<br />
  31. 31. Disclaimer<br />This presentation has been prepared by Barclays Capital - the investment banking division of Barclays Bank PLC and its affiliates worldwide (‘Barclays Capital’). This publication is provided to you for information purposes, any pricing in this report is indicative and is not intended as an offer or solicitation for the purchase or sale of any financial instrument. The information contained herein has been obtained from sources believed to be reliable but Barclays Capital does not represent or warrant that it is accurate and complete. The views reflected herein are those of Barclays Capital and are subject to change without notice. Barclays Capital and its respective officers, directors, partners and employees, including persons involved in the preparation or issuance of this document, may from time to time act as manager, co-manager or underwriter of a public offering or otherwise deal in, hold or act as market-makers or advisors, brokers or commercial and/or investment bankers in relation to the securities or related derivatives which are the subject of this report.<br />Neither Barclays Capital, nor any officer or employee thereof accepts any liability whatsoever for any direct or consequential loss arising from any use of this publication or its contents. Any securities recommendations made herein may not be suitable for all investors. Past performance is no guarantee of future returns. Any modeling or backtesting data contained in this document is not intended to be a statement as to future performance.<br />Investors should seek their own advice as to the suitability of any investments described herein for their own financial or tax circumstances.<br />This communication is being made available in the UK and Europe to persons who are investment professionals as that term is defined in Article 19 of the Financial Services and Markets Act 2000 (Financial Promotion Order) 2001. It is directed at persons who have professional experience in matters relating to investments. The investments to which is relates are available only to such persons and will be entered into only with such persons.<br />Barclays Capital - the investment banking division of Barclays Bank PLC, authorised and regulated by the Financial Services Authority (‘FSA’) and member of the London Stock Exchange.<br />Copyright in this report is owned by Barclays Capital (© Barclays Bank PLC, 2005) - no part of this report may be reproduced in any manner without the prior written permission of Barclays Capital. Barclays Bank PLC is registered in England No. 1026167. Registered office 1 Churchill Place, London, E14 5HP. EUxxx<br />16<br />trant: Note to Production Team<br />Don’t forget to enter EU number<br />EUXXX<br />
  32. 32. London Global Mining Investment Conference<br />Mark Brown<br />Managing Director<br />Head of Barclays Natural Resource Investments<br />Mark Brown is a Managing Director and Head of the Barclays Natural Resource Investments business at Barclays Capital. Based in London, he is responsible for making equity investments in businesses, such as upstream mining, upstream oil and gas, power and renewables.<br />Mr Brown joined Barclays Capital in 1998 from Dresdner Kleinwort Benson where he was a member of the Structured Finance group. Prior to that, he was part of the structured finance group at Rabobank.<br />Mr Brown graduated from The City University with a first class degree in Actuarial Science.<br />Stationers Hall, London<br />Wednesday 30th September 2009<br />www.ObjectiveCapitalConferences.com<br />

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