The Hindu Business Line : Coal Ventures invites merchant bankers for global mine hunt

Exploration drive
Scouts for acquisitions in countries such as Australia, Canada, the US, Indonesia, Mozambique, Zimbabwe and South Africa.
Will also look at private equity deals with unlisted companies, partners, and owners having coal assets across the world.
Also open to acquiring mining licences to develop coal mines across the globe.

Anil Sasi

New Delhi, Jan. 1 Kicking off its hunt for coal assets overseas, Coal Ventures International Ltd (CVIL) — a newly formed special purpose vehicle promoted by Steel Authority of India Ltd, National Thermal Power Corporation Ltd, Rashtriya Ispat Nigam Ltd, Coal India Ltd and National Mineral Development Corporation Ltd — has invited expressions of interest from global investment bankers to assist it in scouting for both metallurgical and thermal coal assets abroad.

The company, which has been accorded the status of a mega PSU and has at its disposal a war chest of over Rs 10,000 crore, is eyeing acquisitions in countries such as Australia, Canada, the US, Indonesia, Mozambique, Zimbabwe and South Africa. The acquisitions are to be primarily undertaken with a view to ensure coal supplies for the steel and power sectors.

CVIL, which has $900 million in equity contributions from the five major promoters and around $1.8 billion in debt, would be eyeing three routes for picking up assets abroad.

Besides strategic investment in the shares of listed coal companies which produce metallurgical, PCI and steam coal in countries including Australia, the US and Canada, CVIL would also look at private equity deals with unlisted companies, partners, and owners having coal assets across the world, specifically in countries such as South Africa, Mozambique, Zimbabwe, and Indonesia. The venture is also open to acquiring mining licences to develop coal mines across the globe.

The merchant bankers are to be selected on parameters including their global foot prints and specific credentials in the business in various geographies and record of overseeing mergers and acquisitions, particularly of coal assets.

CVIL has been handed over more powers than a navaratna company as it has been mandated to clear investment proposals of up to Rs 1,500 crore at the board level itself. A navaratna company currently can clear investments up to Rs 1,000 crore.

The new company, which would have functional directors and a business development group comprising officials from the five promoter companies, is to have a total authorised capital base of Rs 10,000 crore and a paid up equity of Rs 3,500 crore. While SAIL and CIL would chip in with Rs 1,000 crore each, the other three companies are to contribute Rs 500 crore.

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