Gobi Coal Said to Seek Buyers as Stock Rout Hurts IPO Plan
Gobi Coal and Energy Ltd.’s owners are seeking to sell the Mongolian mining company for as much as $750 million, said two people with knowledge of the matter.
Gobi Coal, whose owners include Beijing-based private- equity firm Origo Partners Plc (OPP), has requested potential buyers submit initial bids by mid-October, said one of the people, who asked not to be identified because the sale process is private. The company is also pursuing the option of an initial public offering in Toronto, the people said.
Acquisitions in Mongolia have jumped this year as rising demand for the country’s resources prompted Banpu Pcl and Mongolian Mining Corp. (975) to buy assets there. Ulaanbaatar-based Gobi Coal may fetch a higher valuation in a takeover than in an IPO, the people said.
Gobi Coal may be valued at $500 million to $750 million in an acquisition, according to the people. Origo bought 21 percent of Gobi Coal in November 2009 in a deal that valued the company at about $71 million.
Origo said today in its report for the six months to June 30 that it wrote up the value of its Gobi Coal stake to $65.8 million from $52.7 million on Dec. 31. The fund owns 17.6 percent of Gobi Coal, according to the statement.
Mo Munshi, Gobi Coal’s chief executive officer, didn’t respond to calls to his mobile phone seeking comment on the sale. Origo Partners Chief Financial Officer Niklas Ponnert declined to comment.
Goldman Hired
Gobi Coal hired Goldman Sachs Group Inc. to help it find a buyer, the people said. Connie Ling, a Hong Kong-based spokeswoman for Goldman Sachs, declined to comment.
“We believe there is the potential for a number of revaluation and capital market events in the second half of the year, most notably of Gobi Coal,” Origo said in today’s statement.
Gobi Coal started looking for acquirers after declining stock markets made an IPO more difficult, the people said. The global value of first-time share sales has slumped to $25 billion in the third quarter from $62 billion in the preceding three months, as the MSCI World Index fell 12 percent since June 30, data compiled by Bloomberg show.
The company may still target a share sale as early as in the first quarter of 2012 should it fail to get attractive takeover offers, one of the people said.
Coal Deposits
Gobi Coal supplies clients in western and northeastern China from its two coking and thermal coal deposits in the south-western Bayanhongor region of Mongolia.
Banpu, Thailand’s biggest coal producer, agreed this month to acquire Hunnu Coal Ltd. (HUN), which owns 11 coking and thermal coal projects in Mongolia, for A$477 million ($493 million), after buying a $45 million stake in March. Mongolian Mining in June paid $464.5 million to acquire the Baruun Naran mine in Mongolia from Kerry Holdings Ltd.
Prices for coking coal, a key steelmaking raw material, reached records in the second quarter, boosting appetite for mergers and acquisitions. Banpu has said Mongolia’s coal industry has great potential because of its closeness to markets including China.
Ivanhoe Mines Ltd. said last week its advisers contacted potential investors for some assets, including its 57 percent stake in coal producer SouthGobi Resources Ltd. (SGQ) in Mongolia.
To contact the reporter on this story: Cathy Chan in Hong Kong at kchan14@bloomberg.net
To contact the editor responsible for this story: Philip Lagerkranser at lagerkranser@bloomberg.net
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