Financial Times VALLAR : Buy more Bumi

Vallar, a natural resources fund founded by Nat Rothschild, has deferred closing part of its $3bn deal with Indonesian miner Bumi, originally intended for this month, until February.

The company said the share exchange with Bumi, in which it is taking a 25 per cent stake, would now take place when it published its prospectus for Bumi plc, the new name for London-quoted Vallar. In November, Vallar, which had raised £707m in July, announced the creation of the company, which will be the largest foreign supplier of thermal coal to China.

It is paying $1.58bn for 75 per cent of Berau Coal Energy, the fifth-largest producer in Indonesia, comprising $739m in cash and 52.3m shares priced at £10 each. A total of 90m Vallar shares at £10 will be issued in exchange for 25 per cent of Bumi, the crown jewel of Indonesia’s family owned Bakrie Group. “[The exchange] was originally a fluid situation, and the reason why we did it this way is to simultaneously do the Bumi exchange at the same time as publishing the prospectus [for Bumi plc],” said Mr Rothschild, Vallar chairman.

The Berau deal will close in April, according to the company.
Vallar shares rose 56p to £12.86. Mr Rothschild said Vallar, which has a market capitalisation of £866m, “is on track for a premium [FTSE 100] listing by April”. He added that Vallar hoped to increase its stake in Bumi after the share transaction by offering the remaining shareholders Vallar stock.

Last week, the Financial Times reported Vallar is considering more coal acquisitions in North America and Australia with up to $1bn in value. In December, Mr Rothschild held discussions with the China Investment Corporation, the state-run sovereign wealth fund which holds $1.9bn of debt in Bumi, which could contribute $100m in finance.

However, Mr Rothschild ruled out acquisitions before the Bumi and Berau deals had closed “In the next two to three months it doesn’t make sense to divert our efforts elsewhere,” he said.