It’s a service that was born out of a frustration with the way the capital markets service the junior mining sector.
“Our initial business model targeted facilitating the development of mining operations via a typical GP/LP (general partner, limited partner) fund model,” says David Bellingham, Investment Director of MINEXIA, the parent company of NR Private Market.
Highly experienced mining industry professionals
“But that didn’t turn out to be so easy, so we thought of an alternative strategy.”
MINEXIA is a specialist advisory business run by a team of highly experienced mining industry professionals, including Bellingham, Tim Livesey, the chief executive of Oriole Resources, Drew Craig, an exploration and development specialist, and risk management specialist James Bellamy.
They realised that while at some levels the mining sector has broadly recovered from the trials and tribulations that beset it earlier in the decade, when it comes to junior companies looking to raise between US$1mln and US$5mln, a significant opportunity still remains.
Of course, for a multitude of junior miners, such a sum is the optimum amount, since it allows for significant spend on exploration without completely blowing out the shareholder base with dilution.
Brokers don’t quite see it that way though.
“Most brokerage houses are trying to get the biggest bang for their buck,” says Bellingham. “And since there’s almost as much work involved in a US$5mln raise as there is in a US$50mln raise, but the commission will be proportionately greater the more they raise, the emphasis is always on the larger deals.”
But that’s not the way NR Private Market will work.
Online platform with registered high net-worth investors
Instead, it operates an online platform that invites sophisticated and high net worth investors to register and thereby gain access to ongoing fundraising deals, accompanied by a suite of due diligence material.
For the time being, NR Private Market is initially focusing on raising funds for private companies, adding to the air of exclusivity and allowing investors, for the most part, a chance to participate very close to the inception of companies. Upon achieving a degree of scale, public companies will be welcomed to raise capital.
That, in turn, means the equity is likely to come cheaper, and the upside will be greater, although the risk will be too.
A broker with a difference?
But that’s why NR Private Market, with its highly experienced team, will only allow the best deals to come onto its platform, and why too it’s also only allowing sophisticated investors in.
In a sense then, NR Private Market will be operating as a broker with a difference - its commissions will be smaller, its investors will all have provided KYC and anti-money laundering certification, and it will be highly selective about who it matches up with those investors.
The platform is already live and signing up investors, and once a certain critical mass of uptake is reached, NR Private Market will offer its bespoke and select audience its first tranche of deals.
What these are, remains to be seen, but the company isn’t short of interest from mining companies. And no wonder – the industry is crying out for innovative ways of raising capital, especially if it’s cheaper than your standard sources.
Not that NR Private Market is looking to supplant brokers.
“We’re just offering an extra service to companies,” says Bellingham. “We’re not looking to take over the market.”
But how will it work in practice?
According to NR Private Market’s modelling, investors are likely to commit around £10,000 each, so a commitment from around 100 investors on the platform will take a company up to a ballpark £1mln in new funds.
Each deal will vary in terms of size and average investor commitment, but if NR Private Market can meet those parameters, it will have a very successful model on its hands, and one that new mining companies will be likely to flock to.
At that stage, there’s every chance the company will offer its service to listed companies too.
“We’re hoping to get a few thousand investors signed up within a couple of months,” says Bellingham.
“Then we’ll open up our first £1mln ticket. And once that deal closes it will open up the floodgates.”
Sign up here on https://www.nrprivatemarket.com/