Former JSE star Lloyd Pengilly’s QKR scraps expansion plans on mining rout

By Jesse Riseborough, Dinesh Nair and Firat Kayakiran

Haul Trucks RioTinto mining(Bloomberg) — QKR Corp., a mining fund headed by former JPMorgan Chase & Co. banker Lloyd Pengilly and backed by Qatar’s sovereign wealth fund, has scrapped plans to expand amid a plunge in commodities, according to four people familiar with the situation.

QKR won’t make any new investments, the people said, who asked not to be named because the matter is confidential. The fund, which made its only acquisition in July last year, struggled to gain support from its Qatari backer for further deals following management changes at the country’s $100 billion sovereign wealth fund earlier this year, they said.

Set up in 2012 to tap distressed sellers of mining assets amid waning prices, QKR’s ambitions have been stymied by a decline in commodity prices to the lowest in 13 years. The company paid $110 million to buy the Navachab gold mine in Namibia last year from AngloGold Ashanti Ltd.

It explored a bid of about $1 billion for Canada’s Nevsun Resources Ltd., according to people familiar with the plan in November. QKR’s interest in Nevsun later stalled as its lost support from its Qatari backers.

Compounding QKR’s challenges was the death of Qatar’s co- investor in the fund, Jan Kulczyk, at the age of 65. Kulczyk, Poland’s richest man, made his fortune buying companies from the government and selling them to private investors. He succumbed to complications following a heart operation.

A team of people at QKR studying possible acquisitions has been disbanded, one of the people said.

An e-mail to the official QKR address listed on the fund’s website bounced back. Andre Liebenberg, a senior executive at QKR, didn’t immediately respond to a message left on his office phone. A London-based spokesman for Qatar Investment Authority declined to comment.

“Our strategy is to put together a portfolio of diversified assets, not just a gold play,” Pengilly, who worked at JPMorgan for about 28 years to mid-2012, said in an interview in February last year.