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24/09/11 7:40 PM

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Posted: Thu, Apr 28 2011. 1:00 AM IST

Halcyon acquires two mines in Goa, Karnataka

Divya Guha
Investment company Halcyon Finance and Capital Advisors Pvt. Ltd (HFCA) has acquired two mines in Goa and Karnataka in a partnership with an Indian iron ore miner. The transactions were closed at an aggregate of about $200 million (around `890 crore), said HFCA chief financial officer Vandana Pakle. HFCA declined to disclose the name of the co-investor citing a confidentiality agreement. The two mines have total estimated iron ore reserves of close to 115 million tonnes (mt), the company said. No new government permission or clearance is required as the mines are already operational. The Goa mine is expected to provide about 1 mt of iron ore a year and the Karnataka mine, about 2.5 mt, the company said. The combined valuation for the transactions was about $2 per tonne of ore reserves and resources. HFCA leads and sponsors transactions with co-investors by forming special purpose vehicles (SPVs) for each transaction. HFCA founder Abhay Soi said it focuses on buyouts, generally using a percentage of its own proprietary capital to sponsor transactions, with the balance being raised through coinvestors, who end up sharing the upside. In this transaction, HFCA has purchased rights for 20% of the reserves with an option to convert to an equivalent stake in the SPV. Soi said a perk to doing the deal was an opportunity for consolidation in the mining space, given the fragmentation and other challenges faced by the mining sector. Pakle said the transactions are in line with HFCAs investing principle. Such transactions provide downside protection, good ongoing cash-oncash yields and clear line of sight for capital appreciation in the medium to long term, she said. Iron ore prices are expected to remain firm over the next year and, therefore, will benefit the miners, said Chandrani De, a metals analyst at Ambit Capital Pvt. Ltd. HFCA recently acquired a 500-bed tertiary care super specialty hospital management company, Integrated Health and Healthcare Services India
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