October 16, 2008

ICV to hire bankers to hunt for coal reserves abroad

ET reported that International Coal Ventures has decided to empanel three to four merchant bankers to identify coal reserves in foreign countries.

As per report few merchant bankers made their presentations to the ICVL board. Bankers in the fray include JP Morgan, HSBC Securities, Citi Bank, Societe Generale and Kotak Securities. A final selection will be done in the next 10 days.

CIL sources close to the development said that “Three or four of the bankers will be empanelled. They will scout for coal blocks in other countries, do due diligence, explore legal and financial angles on ICVL’s behalf and do their bit for the company to acquire these blocks. They will also be responsible for valuation of the blocks and prepare the proposal for takeover. However, if ICVL gets information on the available blocks, it will hand over the task to these merchant bankers for taking necessary action.” The source added that “There will be prefixed terms laid out by ICVL for dealing with foreign parties.”

ICVL is a special purpose vehicle floated by SAIL, NTPC, RINL, NMDC and CIL to acquire coal blocks overseas. It was floated to pursue an aggressive mergers and acquisition strategy for coal blocks. SAIL and CIL contributed INR 1,000 crore each to ICVL’s equity while RINL, NMDC and NTPC chipped in with INR 500 crore respectively. Based on the INR 3,500 crore equity component, the company will be able to mobilize nearly INR 6,500 crore of debt.