Erdenes Tavantolgoi IPO could raise $10.6 billion

Erdenes Tavan Tolgoi, the Mongolian state-owned coal miner proposing an initial public offering, may be worth as much as $10.6 billion, according to Frontier Securities.

The value of the each Erdenes share is 933 tugrik (70.8 cents), Frontier said in a e-mailed report, citing a May 30 statement on the government’s website. Frontier calculated the value of the company based on Erdenes having 15 billion shares.

Erdenes Chief Operating Officer Graeme Hancock confirmed a value had been set without giving further details.
The company last month delayed its planned IPO until February or March, citing a decline in global market conditions. It had planned to raise $3 billion from the share sale in Hong Kong , London and Mongolia’s capital, Ulan Bator before the delay.

“The valuation is reasonable and is in line with that of Mongolia Mining Corp. (975),” Helen Lau, an analyst at UOB-Kay Hian Ltd. (UOBK) in Hong Kong, said by phone. “But market sentiment is poor right now and investors may not have the appetite.”

Mongolian Mining, the nation’s biggest coking coal exporter, is worth HK$19.8 billion ($2.5 billion) based on today’s share price at 2:54 p.m. It has 3.7 million shares outstanding, according to data compiled by Bloomberg.

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