Mongolian Mining Said to Win Approval for Nation's First IPO in Hong Kong

Mongolian Mining Corp. received approval from the Hong Kong Stock Exchange for a $1 billion initial public offering, the first by a Mongolian company in the territory, according to two people familiar with the IPO.

Mongolian Mining, formerly known as Energy Resources, plans to list as much as 25 percent of its freely traded shares after the initial sale, said the people, who declined to be identified because the information is not yet public.

No companies based in Mongolia are currently listed in Hong Kong, according to data compiled by Bloomberg. The IPO would come after Moscow-based United Co. Rusal in January became the first Russian company to go public in the territory, where Ernst & Young LLP projects IPOs will reach a record.

“Hong Kong has ambitions to, over time, become a world financial center with diverse listings,” said Lei Wang, who helps oversee more than $56 billion at Thornburg Investment Management in Santa Fe, New Mexico. “The money in Hong Kong is looking for alternatives to Chinese stocks to allow them to diversify, and there’s a lot of liquidity there looking for returns.”

Mongolia plans to privatize state-owned assets in initial share sales in local and international stock markets such as Hong Kong, Dulam Sugar, chairman of the Government of Mongolia’s State Property Committee, said on June 15.

Landlocked Nation

The landlocked country between China and Russia is seeking investors to help fund a national development strategy to grow its economy by 14 percent between 2007 and 2015, which would more than double gross domestic product per capita for the nation’s 2.7 million people to $5,000 from the current $1,900.

Mongolian Mining’s shares may begin trading in early October. New York-based JPMorgan Chase & Co. and Citigroup Inc. are the bookrunners for the IPO, according to the people.

Initial sales in Hong Kong have raised HK$145.4 billion ($18.7 billion) so far in 2010, more than the same period in 2007, Bloomberg data show. Offerings may reach a record HK$370 billion this year, according to accounting firm Ernst & Young.

American International Group Inc., the New York-based insurer preparing an initial offering of its Asian unit on the Hong Kong exchange in November, dropped a plan to sell a portion of AIA Group Ltd. before the IPO, two people with knowledge of the matter said today. Potential buyers failed to show how they would finance the purchase of as much as 30 percent of the unit, according to the people, who declined to be identified because the talks were private.

To contact the reporters on this story: Zijing Wu in London at zwu17@bloomberg.net; Lee Spears in New York at lspears3@bloomberg.net.

Source:Bloomberg News Service