Mick Davis: Billiton Listing was Pivotal for London
Issue 109, December 2014
Two weeks ago at a lunch in London, investment banker Ian Hannam gave a presentation to hedge fund managers. A merger between Glencore and Rio Tinto is all-but-inevitable, he said, adding that he was “responsible” for the merger of Billiton and BHP.
He has not always been so modest. “There are four people who claim they brought Billiton to London,” Hannam is previously quoted as saying. “Gilbertson, myself, Adrian Coates [a banker at HSBC] and Davis. The answer is, it was Davis.”
Mick Davis, a qualified cricket umpire, left Billiton after helping to drive through its merger with BHP, ducking the move to Australia to create London-based Xstrata. “The listing of Billiton in London was the defining event not only for our company,” Davis says, “but it revitalised London as the centre of mining finance after years of stagnation.”
Billiton's UK listing presaged that of both Glencore and Xstrata, which merged last year, whilst Xstrata's combative takeovers of Australia's MIM and Canada's Falconbridge, for a combined $26bn, consolidated London's position as the mining capital for diversified majors.
Gencor's acquisition of Shell's aluminium business was already underway when Davis joined as finance director in 1993, but he says his “key contribution” at the group was landing a $1bn debt package for the deal, despite South Africa's strict capital controls.
Davis has raised $4.8bn in the last year for his new vehicle, X2, and has reportedly appointed JP Morgan to provide a further $8bn in debt, inevitably linking him to BHP Billiton's current cast-offs, including Nickel West in Australia and its coal operations in South Africa.
“We’re South Africans,” Davis has said. “We understand the country and the environment. We think there are good assets there and there are certain parts that I would be very pleased to invest in.” He is also eyeing companies on London's junior market, in need of a financing uplift to push them into production, sources say.
In pursuit of diversification, aggressive M&A across the commodities complex is a hallmark of Gencor's stable: whilst Gilbertson rolled-up BHP Billiton, Mick Davis closed nearly 40 transactions as chief executive of Xstrata, transforming the company from a grab-bag of assets into a dominant producer of nickel, vanadium, copper, ferrochrome, zinc and coal.
Marius Kloppers, as chief executive of BHP Billiton, meanwhile pursued multi-billion dollar takeovers in potash and natural gas, whilst beefing-up its oil and aluminium assets, earning him a reputation as an “M&A junky.”
Gencor and Billiton's team had an “ability to take risk”, Davis says. “Brian created an environment for the team to prosper and I am forever grateful for that opportunity. His main strength was not succumbing to what appeared to be insurmountable obstacles and constantly driving until the desired outcome was reached.”
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