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Dave Forest

Dave Forest

Dave is Managing Geologist of the Pierce Points Daily E-Letter.

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Undeterred By Volatile Markets, Resource Investors Ramp Up Investments

I wrote in early August about how natural resource investment has been hitting surprising highs in 2015.

And this week we got confirmation this is likely to be a record year for resource-focused funds.
Investment data gurus at Preqin released a report yesterday showing that natural resources investment funds have already raised $54 billion so far in 2015. With a total of 45 new funds created this year.

As the chart below shows, that already puts this year’s resource funds ahead of the $52 billion raised during the entirety of 2014. And puts the total for 2015 very close to the all-time record of $61 billion raised for natural resources in 2013. Related: The Elephant In The Room At The Paris Climate Conference

Preqin suggests this year is “on course” to match the record highs of 2013. Noting that 212 additional natural resource funds are currently on the road pitching investors — targeting a total raise of $109 billion.

This is of course great news for project developers — in the right spaces. Related: China Could Become Global Leader In Nuclear Tech

As the chart below shows, 71% of the funds raised for resources this year are dedicated to the energy sector. No surprise, given the amount of enthusiasm there’s been for shale (55% of resource funds in 2015 have been closed in North America).

Related: UK Banking On NatGas And Nuclear Over Renewables

In fact, Preqin notes that over half of energy funds in 2015 have ended up raising 120% or more of their targeted amounts. Suggesting investor appetite is strong.

Another interesting note is a rise in agriculture funds. Which made up 20% of funds raised this year — up significantly from just 10% in 2009.

Mining on the other hand, has been less popular. With just one fund closed so far in 2015, for a total of $400 million — making up only 2% of total fundraising, the lowest share since 2009.

That’s down from a high of $4.6 billion in 2012 — representing the lowest level of mining funds raised since 2009, when $100 million was dedicated to new investment vehicles.

Preqin notes however, that there are 11 mining funds currently marketing, with a total target of $3.2 billion.

We’ll see if that cash comes through. Whatever happens, it’s encouraging to see the overall natural resources space still getting a lot of attention from global investors.

Here’s to funding the next big find

By Dave Forest

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