BNP Paribas, Deutsche Bank, Goldman Sachs and Macquarie have been selected by the Mongolian government to run the IPO of the country’s Erdenes Tavan Tolgoi mining assets, according to sources familiar with the deal. The IPO, expected to raise over $2 billion, is viewed as a potential landmark for Mongolia; the world’s top investment banks have been pitching furiously in Ulaan Baatar since January this year. Spokespeople at the banks named told Euromoney they did not wish to comment on the deal, presumably for fear of offending the client, but three independent sources have confirmed the four firms as being mandated. Despite reports elsewhere, Euromoney understands that UBS is not one of the lead managers.
The deal has been hotly contested. There have been widespread reports of a fight between bankers from two US firms not mandated on the deal taking place at an Irish bar in Ulaan Baatar, and a source involved with the pitching process describes the banks involved throwing their top level staff at the mandate. “I’ve never seen flights to UB so loaded with Asia heads of investment banking and ECM,” says a source, “most of whom have probably never been to Mongolia in their lives.”
Tavan Tolgoi is the name given to a collection of coal deposits in Mongolia thought to contain 6.4 billion tonnes. The government has been soliciting strategic investors, mining contractors and investment banks to run the IPO process, which is expected to take place towards the end of this year.
Banks that will be disappointed not to have won the mandate include Citi, which had a 100% market share in Mongolian mining deals until this point with the IPOs of MMC and South Gobi; JPMorgan, which had been fighting hard for the mandate; and Morgan Stanley, which was reported as having hired the son of the prime minister to help its bid.
Euromoney will publish a detailed feature length investigation into the pitching process, the challenges posed by the deal and its significance for Mongolia in May.
Update: Deutsche, Goldman win plum Mongolia IPO roles
March 18, 2011