Pala Investments Holdings Ltd., a $900 million (€694.7 million) investment fund started by Russian billionaire Vladimir Iorich, is studying further investment in mining companies, particularly gold producers.
Gold miners are „near the top of the list” of resource companies the fund wants to invest in, Joseph Belan, managing director at Swiss-based Pala Investments AG, which advises the fund, said by phone yesterday. Belan didn't specify what other kinds of mining companies the fund is studying. Gold company takeovers last year surged to $24.3 billion, according to Bloomberg data, the highest in at least a decade as producers struggled to find new deposits.
The price of the precious metal has rallied for six years, more than doubling since 1999. „If you look at the exploration success in gold in recent years, there's not a tremendous amount,” said Jan Castro, also a managing director at Pala. „On the demand side, India continues to play a very substantial role, and we think that will continue.” Pala bought a 13.3% stake in Australian gold mining company Avoca Resources Ltd. yesterday for A$26.2 million ($21 million).
Pala may increase its stake in Avoca, said Castro, a former executive at OAO Mechel, a Russian coal and steel producer co-founded by Iorich. More than half of the $900 million is still available for investment, said Castro. Iorich sold his 42.2% stake in Mechel and used part of the funds to set up Pala last October. Pala will focus on „smaller companies where we can add capital as they pursue growth, and also provide strategic advice on how they can grow,” said Belan, a former executive director in investment banking and head of metals, mining and steel at Goldman Sachs Group Inc. in London. (Bloomberg)