A MONGOLIAN coal miner is considering a multi-billion flotation in London in a deal that will please investment bankers who have been largely starved of new issues in London’s faltering IPO market.
According to banking sources, Goldman Sachs and Deutsche Bank, are working on the potential listing of the state-owned Tavan Tolgol, with hopes that the group could list with a valuation of in excess of £10bn sometime in the New Year.
There are reports that the group might list as little as 15 per cent of its shares in the so-called free float, although yesterday sources suggested that this figure was a long way from being decided. London listing rules normally require a 25 per cent free float, although sometimes this requirement is waived by the llsting authorities if they decide the issue is large enough to ensure a liquid market in the shares.
Yesterday sources close to the deal said the company would demonstrate that all the corporate governance requirements were in place before it came to market, with some UK investment institutions complaining that the listing procedures have become too lax. “There’s a lot up in the air at the moments and a lot to do,” said one person close to the deal.
Mongolia’s prime minister Sukhbaatar Batbold wants to complete the flotation, which will involve a listing in Hong Kong and Mongolia as well, by March, although some think this might be too optimistic.
If Tavan Tolgol does make it to market, it will follow a host of other foreign-owned resources groups listing in London such as Evraz and Polymetal in a phenomenon which has concerned some investors who feel the FTSE indices are becoming too dominated by such groups.
However, without such new market entrants, the new issues markets would be even more dormant than they already are.
WHO’S WHO AND WHAT’S HAPPENED SO FAR
The steelmaker is part-owned by Chelsea owner Roman Abramovich and launched with a free float of 23.4 per cent. Its current market capitalisation is £5.369bn.
Launched with a free float of 50.7 per cent, 45 per cent of the gold and silver mining company is shared by three billionaires. Its market capitalisation is £4.15bn.
Russia’s largest gold producer with major interests in Kazakhstan, the company intends to launch with a free float of just 13 per cent. Its market capitalisation is £2.491bn.
Mongolian miner is discussing a high-profile float in London sometime next year.