Scipion delves into African mining sector

Scipion Capital has launched a fund that will invest in mining companies operating in Africa.

The Scipion Mining and Resources Fund  launched on November 1 with $15 million of seed capital from the family office of a mining family. Scipion chief investment officer Nicolas Clavel said the fund was taking advantage of undervalued companies in the mining sector that had no access to credit and had accordingly suspended production.

The fund will provide trade finance for and buy equities in smaller companies that have stopped mining with the aim of restarting production and so lift share prices.

Companies would typically have a market cap of up to $200 million and be listed on the Sydney, Tokyo and London AIM stock exchanges. Clavel said Scipion had identified "more than 350" such organisations.

Clavel said Scipion was hoping to attract investment from a full range of institutional investors and he could see the fund's capacity reaching "a couple of billion" dollars.

He said returns could be as high as 50% as share prices tended to leap once a company began production again.

The fund will focus on African countries including South Africa, Namibia, Rwanda, Zambia, Ghana, Tunisia and Congo. The fund will cover a wide range of mining sectors including platinum and copper.

Clavel said the fund would have debt exposure of around 75% which would limit its volatility.

The fund, an exempted segregated portfolio company incoporated iwth limited liability and a number of share classes all focused on Africa, is domiciled in the Cayman Islands. Clients of Scipion Capital, the management company, include hedge funds, Euorpean family offices, financial advisors, private banks, endowments and pension funds.

Minimum investment is $500,000 with a management fee of 2% and a performance fee of 20%.

Citi has been appointed as administrator and Barclays is the custodian. Deloitte is the fund's auditor.