Mongolia Shortlists Banks for Tavan Tolgoi IPO

By Joel ScanlonFeb 27 2011

The initial public offering (IPO) of the Tavan Tolgoi coal mine will be the largest that Mongolia has ever had. The country has shortlisted four banks for the process. The lucky four which survived the culling from a 150 plus applicants are BNP Paribas, Deutsche Bank, Goldman Sachs and Macquarie Bank.

The IPO is expected to raise in excess of $2 billion and the world’s top banks have been wooing the government in Ulaan Baatar since January to rake in the substantial fee for the sale management. The mine is located in the South Gobi Desert and is close to the Chinese border. While the government is keen on a listing before the end of the year the actual production will be some more years away as building infrastructure will take a while yet.

The coal mine is likely to produce 15 million tonnes per year and will help Mongolia overtake Australia as the main supplier of coking coal to China. The Mongolian government is hoping to sell a 30% stake in the mine to international investors. About 10 % will be sold to local firms and another 10% to Mongolian citizens. It will retain 50% of the stake in the mine with itself. The shares will be listed on the Mongolian Stock Exchange and on one overseas one. As of now it seems that it may be listed on the Hong Kong or London stock exchanges.