Private credit funds are considering providing jumbo loans to finance bids for coal mines that BHP Group Ltd. is seeking to divest in Australia.
The mines, Daunia and Blackwater, are located in the northeastern state of Queensland and could be valued at about $5 billion if sold together. Buma and Stanmore, along with Whitehaven Coal Ltd., have made it through to the next round of bidding for at least one of the mines.
Image: Photo by Pedro Henrique Santos
Private credit funds have been increasingly sought after in Asia and globally to finance deals where banks have pulled back. In the second quarter of 2023, 34 new funds raised $71.2 billion globally, more than double the previous three months. In Asia, firms raised $1.4 billion, up from $180 million in Q1.
Stanmore, which has already tapped private credit funds for financing, is no stranger to the asset class.
In November 2021, it secured $625 million in funds managed by Varde Partners, Canyon Capital Advisors, Farallon Capital Asia Pte, and other credit funds to partially fund its acquisition of BHP’s 80% stake in a coal operation joint venture with Mitsui & Co. in Bowen Basin, Queensland.
Buma, which is already a contractor at the coal mine Blackwater under a A$540 million contract, has also made it through to the next round of bidding for the mines.
The remaining financing for the acquisition could be arranged by banks. BHP announced its divestment plan in February 2023 for Daunia and Blackwater, which it co-owns with Mitsubishi Corp. BHP did not respond to a request for comment on the auction timeline and who made it to the next round of bidding.
(Based on reporting by Megawati Wijaya, with assistance from James Fernyhough, Rob Verdonck and Davide Scigliuzzo)
