Investors dig deep to support Rothschild's mining venture

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The Independent Online

Nat Rothschild's new mining investment group, Vallar, closed its £700m flotation yesterday, making it the biggest initial public offering (IPO) in London this year.

Mr Rothschild, a scion of one of Europe's most famous banking families, hopes to use the vehicle to invest in what he considers to be an undervalued mining and commodities sector.

He said yesterday: "These challenged markets present us with attractive acquisition opportunities and we are confident we can acquire a major mining business at a valuation that will generate significant shareholder value and provide a platform for the future growth of Vallar."

Launching the listing last month, Mr Rothschild and his business partner James Campbell, formerly the head of base metals at Anglo American, said they hoped to raise £600m but after "such a positive response from global investors in these difficult markets," the size of the listing was increased.

Vallar placed 68.7 million shares at £10 each. Including money put in by the founders, the IPO raised gross proceeds, before charges, of £707.2m, and it expects to have an enterprise value of between £2bn and £5bn. It said it would focus on regions "where it can leverage the extensive network and strong prior operating and investment experience of the Vallar team", adding that assets in the Americas, Russia, Eastern Europe and Australia were being sought.

The group has denied it has any specific targets in mind, but has committed to spending up to £5bn on projects by 2012. Yesterday. Mr Campbell said he expected Vallar to make its first investment by the end of the first quarter next year.

Mr Rothschild will personally invest about £150m. His mining experience extends to being on the board of Barrack Gold. He is also close to Oleg Deripaska, the head of the Russian aluminium giant Rusal, and holds $40m worth of Glencore bonds. Yesterday Mr Rothschild urged the Swiss-based company to merge with Xstrata, in which it holds a 34.4 per cent stake.

Two years ago, Mr Rothschild was caught in a row between Lord Mandelson, then the Labour secretary of state for business, and the Conservative shadow chancellor, George Osborne. It was claimed that Mr Osborne asked Mr Deripaska to donate £50,000 to the Conservative Party, an allegation that the Tories deny.