Deutsche Bank sells down coal mine loan to private credit funds

Bloomberg News | August 5, 2024 | 

Illawarra metallurgical coal. Image: South32

Deutsche Bank AG has sold a portion of a $600 million loan being used to finance an Australian coal mine’s acquisition to some private credit funds, according to people familiar with the matter.


The German lender in recent weeks sold about $120 million — half of its exposure — to Australian and Asian credit funds including Income Asset Management Group Ltd., Regal Funds Management, and Keyview Financial Group, said the people, who requested anonymity as the matter is private.

The bank plans to retain its remaining portion of the loan that’s supporting a Golden Energy and Resources-led consortium’s acquisition of the Illawarra coking coal mine in Australia. It originally held about 40% of the loan, the people said.

The transaction underscores the growing role of private credit funds as an alternative funding source for coal and and other fossil fuel-related projects, which banks are increasingly avoiding due to environmental, social and governance concerns.

Deutsche Bank, Income Asset and Regal all declined to comment when contacted by Bloomberg. Keyview did not respond to emails requesting comment.

The Golden Energy-led consortium signed the $600 million loan in July with Deutsche Bank and private credit funds namely Davidson Kempner Capital Management LP, Farallon Capital Management LLC, King Street Capital Management LP, Washington H. Soul Pattinson & Co., and Broad Peak Investment Advisers Pte.

The consortium also raised a separate $150 million working capital loan and a A$150 million ($100 million) guarantee facility.

GEAR M Illawarra Met Coal, the entity acquiring the mine from Australia-based South32 Ltd. for $1.65 billion, mandated Grant Samuel as an adviser in its fund-raising efforts, Bloomberg reported in March. Singapore-based Golden Energy, controlled by Indonesia’s Widjaja family, owns a 70% stake in GEAR M Illawarra Met Coal, with M Resources Pty. holding the rest.

(By Megawati Wijaya and Sharon Klyne)