Deal fever hits Mongolia

Yes you have read the headline correctly - "Deal Fever hits Mongolia" - and no I am not making this up.

Mongolia, the world’s 19th largest country by area and ranked 140th in the world by population and 123rd by GDP (PPP) per capita, has suddenly become the place to be for Asia's investment bankers.

Not historically known for its contribution to world M&A deal volumes - Zephyr has recorded some 29 deals totalling just over US$2bn involving Mongolia-based companies since 2002 - there is suddenly a deal in the pipeline that is exciting the investment bankers.

Last year the Mongolian Government approved the plan to sell a 30 per cent stake in Erdenes-Tavantolgoi, the state-owned coking coal mining company in Mongolia, via an initial public offering. This stake is supposed to be worth upwards of $1.5bn, so if the IPO goes ahead this one deal alone would smash the total deal value of the last nine years.

According to the Raw Materials Group based in Sweden, this coal field has some 6.5bn tonnes of reserves and is the second largest coal field in the world - obviously providing tremendous opportunities for all those potentially involved.

This week is the week of formal interviews by the Mongolian Government hence the arrival in town of the investment bankers. I bet the pitch books involved in these interviews make even more interesting reading than usual.

But one other important issue not to be overlooked: having just Googled "5 star hotels in Mongolia" the bankers will be pleased to know that even if they are unsuccessful in their pitches they have an appropriately luxurious place to stay!