RCF Managing Partner James McClements co-founded the firm in 1998 with a vision to enable resources development through private equity participation. Today he maintains a strong passion for the mining and resources industry which began during a childhood spent in the Pilbara.
“My family moved from Perth to the town of Dampier in the Pilbara in 1968 which set the scene for what would ultimately become an extensive career in mining and resources. The family (all seven of us, my parents and my four siblings) moved to Newman in 1975 where I completed high school before beginning my professional career with a BHP Limited traineeship that allowed me to complete an Honours degree in Economics at the University of Western Australia (UWA), which was certainly instrumental in setting me on my career path.”
“During and post University, I worked for BHP primarily at its Mt Whaleback iron ore operations in Newman, where some early entrepreneurial inclination saw me invest in what became a successful video store venture. Moving on from there I spent time travelling around Australia before returning to Perth where I worked in merchant banking at Standard Chartered Bank. Eager for a challenge and to test myself in a bigger market, I accepted a role in Sydney with NM Rothschild & Sons as an analyst in the mining project finance group. In Sydney I also met my wife, Meredith, also from humble Australian country origins.”
“Rothschild was a great environment and training ground to be involved with pre project finance mezzanine style loans. This played to my desire to be exposed to transactions with a greater perceived risk but with corresponding return potential. It was at this time I met Hank Tuten who was heading to the US to run Rothschild in North America after successfully leading and developing Rothschild in Australia and was asked by him to join the Denver office where the relationship continued to build. Hank informally became a mentor to me that ultimately led to a conversation in 1997 that became the catalyst for the creation of RCF.”
After time spent working at Rothschild with Hank Tuten, the pair had identified an untapped opportunity in the resources sector. Over the next year, the first fund was raised and the concept that is now RCF began to take shape.
“By 1997 the investment orientation had begun to change at Rothschild, adjusting to suit its preferred environment and reduce the level of risk on their balance sheet. This essentially was one of the catalysts for my discussions with Hank about how we could continue doing some of the business and transactions that Rothschild had been doing at the time but was now pulling back from. Sitting down with Hank in Vancouver in September 1997, having previously discussed the concept of RCF and private equity, we looked at how to raise pools of capital to financially support mining companies through the engineering study phases of their projects. Hank and I began to map out what would become Resource Capital Funds.”
“The backing and ownership of RCF by Rothschild was critical in getting the initial meetings we needed and opened doors to attract investors. We started fundraising in early 1998 with an initial close in May 1998 which allowed us to make our first investment while fund raising continued until early 1999. In the end we raised $41 million, slightly short of our $50 million target from primarily six very brave investors that still largely remain with us today.”
“We were well advanced in raising our second fund in 2000 when circumstances at Rothschild changed even further and they chose to exit the private equity business. So three of us; Hank, me, and another of Hank’s team in New York, spun Resource Capital Funds off from Rothschild to become Management owned.”
RCF was gaining momentum in its own right and the firm’s reputation as a specialist in mining and a strategic partner was forged as new funds were established.
“We raised $82 million in our second fund over 12 to 18 months while completing the spin off from Rothschild with a final close of RCF II in June 2001.”
“RCF has since prospered as an independent firm, having raised its sixth fund in 2013 with committed capital of $2.04 billion. The senior management group, several who worked together at Rothschild, continues to lead the organization and as a firm we are also very consciously looking to develop our own team. We hire very bright people with a passion for the industry and we go a long way in nurturing them to develop the skills necessary to be successful as investors in the minerals and mining sector. If external people engage with RCF we hope their takeaways are that they’re not only impressed with the depth and skill of the team but also our passion for the industry, which isn’t going to change.”
“The leadership team, in many instances, has been involved in the mining industry for over 30 years and experienced many mining commodity and public equity cycles.”
“Going back to the early 1980s while at university and working during summers up in Newman, I recall it was a very tough time for the iron ore industry with very low iron ore prices and the industry going through significant structural changes. The industry is a cyclical business and those that have been through the cycles appreciate that you’ve got to be patient and you need to take the long term view. With this in mind we look to work with companies with good assets and good people and we support them even when the times are tough.”
With RCF now investing its sixth fund valued at more than $2 billion, James and his wife, Meredith, are passionate about making opportunities available for others through their philanthropic efforts. They have spent some time and resources assisting local educational and other Australian institutions.
“For us, philanthropy generally came about through the nature of our limited partners and the exposure I have had to them over time. We’re dealing with very large endowments, foundations and charitable trusts in the US and one of the very positive aspects about a firm like RCF is if we’re successful, we’re actually supporting a lot of great underlying causes.”
“I certainly remain interested in supporting the development of new businesses and the other interests we have are orientated towards supporting a range of educational institutions. If I look back at my career it was the scholarships and traineeships that have helped me along the way. So we want to find ways to recognize that we have benefited from others generosity and feel that there’s a responsibility to do the same. At the end of the day Meredith and I, enjoy doing that.”