Mongolia plans multi-billion dollar listing in UK, HK for mining arm

The Mongolian government is planning a multi-billion dollar initial public offering (IPO) in London and Mongolia in June this year for state-owned Erdenes-Tavan Tolgoi Co, which controls one of the world's largest coking coal deposit, The Wall Street Journal today reported.

The government plans to sell upto 30-per cent stake in Tavan Tolgoi to international investors, another 10 per cent each to local companies and Mongolian citizens that will leave the government with the the remaining 50 per cent.

The government may also look at an eventual secondary Hong Kong listing because listing Erdenes-Tavan Tolgoi simultaneously in Hong Kong, London and Ulan Bator would not be feasible since Mongolia is not among the overseas markets from which Hong Kong approves listings. UK rules allow listings from any country.

With election in Mongolia around the corner, Hong Kong may not give special exemption to allow the Mongolian-incorporated company to list ahead of the elections, one of the people told the news agency.

The company plans to list in London by issuing global depositary receipts, which are easier to get approval for but tend to have lower liquidity than primary shares.

"The company is focused on listing in London, which is a resource hub and also has close links with the Mongolian exchange," one of the people familiar with the situation told the WSJ. "What's difficult is getting a primary listing in London, which is only possible for UK-domiciled firms, but can't be done by the June time frame."