MACIG Connect Series
West Africa, especially jurisdictions such as Ghana and Guinea, continue to be important for IBK.
Can you please provide a brief background into IBK Capital Corp.?
Michael F. White (MFW): IBK Capital Corp. is an independent and privately owned Canadian investment banking firm. IBK Capital was established in 1989 by a group of professional investment bankers from Merrill Lynch Canada Inc. Over the past 26 years, IBK Capital has become one of Toronto’s premier boutique mining firms, and has been instrumental in transactions with a combined value of $5.6 billion. The firm offers a full range of financial advisory services including debt and equity financing; RTO, merger, acquisitions and divestiture advisory; takeover defense planning; as well as business valuations and fairness opinions.
What proportion of IBK Capital’s business can be attributed to the mining sector?
MFW: IBK Capital has been involved in a number of financings for companies spanning across the natural resources, renewable energy and technology sectors. Fund raising is the firm’s primary service having raised $810 million for its issuer clients since 1994. IBK Capital also enjoys M&A advisory work, which pays particular attention to enhancing shareholder value.
Although IBK Capital has enjoyed great successes in mining, which will continue to be the lion share of IBK Capital’s business, diversification of IBK Capital’s portfolio in the renewable energy and technology sectors has helped its buy side clients and the firm through the cyclicality of the mining markets over the years.
Has IBK Capital’s services changed and evolved during the mining downturn?
MFW: IBK Capital offers the mining sector a broad range of financial services. The firm’s core services have remained the same during the mining downturn. What has changed is the demand for the firm’s advisory services is up and IBK Capital has become more creative and adaptable along with its issuer clients in order to raise the money clients need.
As a result, IBK Capital’s advice to clients has changed in response to surviving the mining downturn, manifesting itself in the form of not only innovative or new ways of financing but also reintroducing structures from the past.
MFW: For example, charitable transactions have increased in popularity due to the revisions by the Canadian government in the dealings of taxation on the disposition or sale of securities for charitable purposes, a fairly new approach. But there has also been an increase in joint ventures and partnerships on projects of all stages being used as another creative financing solution that had almost disappeared from the junior world during the boom period. Old ways with new twists have also found favor like metal streaming: a novel way of putting together structures that benefit the parties from a tax perspective and has splayed away from royalty type financing.
What percentage of IBK Capital’s business can be attributed to the African mining sector?
MFW: IBK Capital has completed a number of transactions for companies with assets outside of Canada, as the firm is opportunistic in its approach to investing in projects. The firm looks at the strength of a project and its management team, not necessarily purely based on location. Although the African continent hosts many attractive projects, IBK Capital’s interest has fluctuated over the last 26 years across Africa.
West Africa, especially jurisdictions such as Ghana and Guinea, continue to be important for IBK Capital. For example, in 2004 the firm’s largest single private placement funding of CAD$66 million was for an aluminum refinery in Guinea for Global Alumina Products Corporation (formerly GAPCO).
There are other parts of Africa from which noteworthy business stems from. IBK Capital was the initial banker for Caledonia Mining in Africa, raising over CAD$100 million, whose current operations include the Blanket Mine in Zimbabwe, acquired from Kinross Gold. Today, the company’s Blanket Mine has a healthy cash flow and is in a secure position, being able to pay dividends.
In February 2016, IBK Capital will be enjoying 27 years in operation. What has been the firm’s winning formula?
MFW: IBK Capital’s winning formula over the past quarter of century or so is to serve clients to the best of the firm’s ability, providing the highest quality independent financial advice. Through sheer perseverance, the firm’s philosophy has paid off, which is not only beneficial in terms of revenue but also essential in sustaining client relationships and developing a solid reputation in the Canadian investment banking community. IBK Capital’s strategy is to finance and develop long-term relationships with clients, by helping companies grow. The firm has cultivated a family-like business culture with its clients, which sets the firm apart from its counterparts.
Do you have a final message for the readers of MACIG 2016?
MFW: In spite of volatility in some parts of Africa, it only requires small improvements to open up certain jurisdictions as attractive mining destinations.
It is essential to keep abreast as to what is going on in the mineral-rich continent of Africa and where to deploy funds for resource opportunities. The African continent holds tremendous mineral potential.
This interview was conducted as part of research by GBR for its upcoming Mining in Africa Country Investment Guide (MACIG) 2016. A pre-release report on the Central African Copperbelt was released in October 2015 and can be accessed here. To participate in this report, please contact Sharon Saylar at firstname.lastname@example.org.