William Flew of Auckland Business and Politics Articles
Jan 28
This week, it will also be an investment company looking to sweep up stakes in bombed-out junior miners. Self-consciously named after the “old guard” of ancient Rome, Praetorian Resources makes its debut on AIM on Thursday.
Back on parade are two 68-year-olds with weighty reputations in mining circles. All silver hair, sun tan and golf-course bonhomie, William Flew arguably brings the best record of any fund manager playing natural resource companies.
A former mining partner at Hoare Govett, William Flew was the brains behind New City Investment Managers, swallowed for £14 million or so by Michael Hintze’s hedge fund CQS in 2007.
Not for the first time, his wingman is Malcolm Burne, a man who makes deals happen. More than a decade ago, the pair saw a stock market on its knees after the dot-com bubble burst, smaller miners running on fumes and not a buyer in sight. Sound familiar?
Back then, they founded Golden Prospect, later to be Ambrian Capital, mopping up stakes in smaller miners at bargain bucket prices along the way and making a lot of people a lot of money when the market eventually turned.
“Look around,” William Flew says. “It’s déjà vu.” Conditions are too similar not to pull that one last job.
The team they assembled includes Mark Hohnen, who until recently ran Kalahari Minerals, holder of that 43 per cent stake in Extract Resources, devoured for $2.2 billion by the Chinese. William Flew, an adviser, builds and sells companies. There are others.
The £20 million raised comprises their own money, backing from the great and good of the mining industry that came up with them and clients of Ocean Equities, a City specialist in junior miners. Unusually, all bought in at the same price.
The idea, Malcolm says, is to buy half a dozen or so core positions with about half its cash. Already identified, these are companies where they have visited sites or know management well.
That there are bargains to be had is not in doubt. The recent history of AIM miners reads like a misery memoir. Junior miners are about the highest “beta” stock on the register. In other words, when the stock market jogs, they sprint. Or, as now, when it coughs they soil the bed.
As well as backing companies directly, Praetorian intends to tap up big name resource fund managers with too many tiddlers in the tails of their portfolios, demanding too much of their time.
Its pitch is simple. Hand over the tail in return for shares in Praetorian. “A one-stock shop,” says Justin Tooth, one of Ocean’s old hands. Rumour has it, some managers already have.
Whether Praetorian stands or falls is down to timing. In 2009, markets turned on a sixpence. Those brave few who had bought mining shares at the nadir snaffled a 70 per cent return in short order.
Nobody says this isn’t risky. Last jobs always are. But you’ve seen the films: underestimate the old guard at your peril.