Erdenes Tavan Tolgoi mulls dropping Hong Kong portion of USD 3bn IPO

By Wong Ka-chun and Ben Scent in Hong Kong and Julie-Anna Needham in London

Erdenes Tavan Tolgoi, the Mongolian company developing the world’s largest untapped coking coal deposit, is considering dropping the Hong Kong portion of its USD 3bn initial public offering, two sources familiar with the situation told dealReporter.
“In the last several rounds of regular meetings with Tavan Tolgoi’s executives, they have shown less interest in a Hong Kong IPO and seem likely to drop the Hong Kong listing proposal,” one source close to the deal said. The company was planning to simultaneously float in London, Hong Kong and Mongolia as soon as late March.
Even the Hong Kong stock exchange is “not very keen” on the offering, as they think it will be a tough sell to investors skeptical of foreign mining stocks, the source added.
“I wouldn’t be surprised if they drop the Hong Kong portion, as it doesn’t make sense for them to commit huge resources but only reap a little benefit,” he said.
The source pointed to the case of Swiss commodities trader Glencore International [805:HK], which drew a lukewarm response from Hong Kong retail investors on its dual listing in Hong Kong and London last year. Glencore had set aside as much as 10% of the deal for Hong Kong retail investors, but the weak response forced the company to allocate only 2.7% of the offering to them, he said. Glencore’s shares are down about 26% on both exchanges since the May 2011 IPO.
Tavan Tolgoi was expected to garner even less interest from Hong Kong retail investors since Glencore was a better known name, the source said.
State-controlled Tavan Tolgoi is still trying to make the Hong Kong portion of the deal happen, but it is looking increasingly difficult as the listing process in Hong Kong is more difficult than London, a second source said.
The main hurdle is the Mongolian government’s recent decision to give Tavan Tolgoi shares to Mongolian citizens for free in February, ahead of the original schedule, the source said. The Hong Kong exchange has restrictions on companies bringing in new investors in the months leading up to their floatation, he said. Bankers and lawyers are still analyzing the implications of the move, he said.
In 2010, Chinese private-equity firm New Horizon Capital bought a 9% stake in Sihuan Pharmaceutical [460:HK] a few months before its Hong Kong listing. However, the Hong Kong bourse objected to the timing of the deal and asked them to unwind it.
There was a debate for some time about which location was most appropriate for Tavan Tolgoi’s primary listing, another source close to the deal said. London has now become the more attractive of the listing options, although the deal is big enough that listing on two international markets simultaneously is possible, the source said.
Goldman Sachs, Deutsche Bank, BNP Paribas and Macquarie are arranging the offering. Erdenes Tavan Tolgoi did not respond to a request for comment.


Post a Comment

Facebook page

Powered by Blogger.


Advertising in Mongolia An Culture Editorial of the Mongolianviews education Environmental protection Famous Mongolians Foreigners in Mongolia Inner Mongolia Ivanhoe Mines Mongolia agriculture Mongolia analysis Mongolia and Australia Mongolia and Belorussia Mongolia and Cambodia Mongolia and Canada Mongolia and central Asia Mongolia and China Mongolia and Cuba Mongolia and EU Mongolia and Germany Mongolia and Hongkong Mongolia and Hungary Mongolia and India Mongolia and Inner Mongolia Mongolia and Iran Mongolia and Italy Mongolia and Japan Mongolia and Kazakhstan Mongolia and Korea Mongolia and Kuwait Mongolia and Malaysia Mongolia and Nato Mongolia and North Korean Mongolia and Poland Mongolia and Russia Mongolia and Singapore Mongolia and South Korea Mongolia and Taiwan Mongolia and the world Mongolia and Tibet Mongolia and Turkey Mongolia and UK Mongolia and Ukraine Mongolia and UN Mongolia and USA Mongolia and Vietnam Mongolia Banking Mongolia civic society Mongolia crime Mongolia diplomacy Mongolia Economy Mongolia Education Mongolia Energy Mongolia Finance Mongolia Health Mongolia History Mongolia holiday Mongolia in international media Mongolia Industries Mongolia Joke Mongolia law Mongolia LGBT Mongolia medical Mongolia military Mongolia Mining Mongolia Mining Developments Mongolia Mortgage Mongolia natural disaster Mongolia Petroleum Mongolia public announcements Mongolia railways Mongolia Religion Mongolia society Mongolia Sports Mongolia Stamp Mongolia telecommunication Mongolia tourism Mongolia Urbanization Mongolia Wild Life Mongolian Agriculture Mongolian Archeology Mongolian Food Mongolian Gay Mongolian Government news Mongolian History Mongolian Military Mongolian Mining Development Mongolian Movie Mongolian News Mongolian Parliament Mongolian Political news Mongolian Press Mongolian Songs Mongolian Women Mongolian Youth Mongolians abroad Moninfo Opinion Oyu Tolgoi Investment Agreement Photo news Press Release Rio Tinto Tavan Tolgoi coal mine Ulaanbaatar development Weird expatriates in Mongolia

Blog Archive


Live Traffic