Financial Time Vallar eyes acquisitions to follow Asian deal

By Christopher Thompson

Published: January 3 2011 23:00 | Last updated: January 3 2011 23:00


Vallar, the London-listed cash shell founded by financier

Nat Rothschild, is looking at acquisitions of coal assets in North America and Australia worth up to $1bn (£646m) as it seeks to bolster its aspirations to join the FTSE 100.

Vallar is set to be transformed this month under a complex deal that will see it become a vehicle for Indonesia’s powerful Bakrie and Roeslani families in order to list their interests in London.

The cash shell will acquire stakes in two Indonesian coal miners,
Bumi Resources and Berau,
for $3bn in cash and shares.
In the process, Vallar will be renamed Bumi plc and Mr Rothschild will be joined on the shareholder register by the Bakries and Recapital, one of Indonesia’s biggest private equity firms headed by Rosan Roeslani.

The company will be considering further acquisitions “not before the prospectus for Bumi Plc is released ... so by the end of January, beginning of February”, according to a person close to the company.

Vallar is currently looking at a coal mine in Mongolia as well as coal assets in Australia and North America, although the latter two regions are seen as more probable targets.

“[Vallar] is in the market for a $1bn business in a western economy so Australia and America is more likely [than Mongolia],” said the person.

Under the current complex deal to become Bumi plc, Vallar will pay $739m in cash and $833m in new shares for 75 per cent of Berau Coal and Energy, controlled by the Roeslani family.

It is also paying $1.43bn for 25 per cent of Bumi Resources, controlled by the Bakrie family which has interests in oil and gas, telecoms, palm oil, infrastructure and real estate as well as mining. Indra Bakrie will become Bumi plc’s chairman.

Bakrie Group will own 43 per cent of the enlarged share capital, Recapital 24.9 per cent and existing Vallar shareholders 32.1 per cent.

In December, Mr Rothschild, Vallar’s chairman, held discussions with the China Investment Corporation, which holds $1.9bn of debt in Bumi, in which further potential acquisitions were discussed. It is understood that CIC could be prepared to provide up to $100m in finance for the coal acquisitions being considered.

Daren Morris, Mr Rothschild’s partner in Vallar, told the Financial Times he hoped the company would join “the bottom quarter” of the FTSE 100 by the summer.

The two Indonesian companies Bumi Plc has stakes in – Bumi and Berau – produced an estimated combined total of 78m tonnes of coal in 2010, which Vallar said would nearly double to 140m tonnes by 2013. That would make it the largest exporter of thermal coal to China.

Indonesia already supplies millions of tonnes of coal a year to fuel the growth of China, India and South Korea, and domestic demand is expected to rise significantly as Indonesia’s economy expands.

Acquisitions in North American or Australia could see Vallar overtake

Xstrata as the world’s largest producer of thermal coal.