(Bloomberg) — Private credit funds are considering jumbo loans to help finance bids for coal mines that BHP Group Ltd. is seeking to offload in Australia, people familiar with the matter said.
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The funds are in talks to potentially underwrite financing of $2 billion to $3 billion for competing bids from Indonesian mining contractor Bukit Makmur Mandiri Utama Pt (Buma) and Australian coal producer Stanmore Resources Ltd., according to the people, who asked not to be identified speaking about private matters.
The mines are called Daunia and Blackwater in the northeastern state of Queensland. Buma and Stanmore have made initial bids for at least one of them, the people said. A deal for both mines could be valued at about $5 billion, and the remainder of the financing could be arranged by banks, the people added.
Demand for private credit in Asia and globally has been picking up lately, as the $1.5 trillion market worldwide steps in to help finance deals where banks have often pulled back. In the second quarter globally, 34 new funds raised $71.2 billion, more than double the previous three months, according to data from research firm Preqin. In Asia, where the asset class is still growing from a lower base, firms raised $1.4 billion, up from $180 million in the first quarter.
BHP announced its divestment plan in February for Daunia and Blackwater, which it co-owns with Mitsubishi Corp.
Both Buma and Stanmore have made it through to the next round of bidding, the people said. Whitehaven Coal Ltd. is also still in the running for the mines among others, according to the people.
Stanmore is no stranger to private credit. In November 2021, it tapped $625 million from private credit funds managed by Varde Partners, Canyon Capital Advisors, Farallon Capital Asia Pte, and other credit funds to partially fund its acquisition of BHP’s 80% stake in a coal operation joint venture with Mitsui & Co. in Bowen Basin, Queensland.
The other bidder Buma is already a contractor at the coal mine Blackwater, under a A$540 million contract.
Stanmore, Buma, and Whitehaven declined to comment. BHP didn’t respond to a request for comment on the auction timeline and who made it to the next round of bidding.
–With assistance from James Fernyhough, Rob Verdonck and Davide Scigliuzzo.
(Retops and adds context throughout)
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