Source: Reuters                           Date: 17 February, 2011

Mongolia is expected to appoint investment banks by next week to manage an IPO worth up to USD5 billion for the world's largest untapped coking coal deposit, sources with knowledge of the matter have said. More than 150 bankers from a dozen Wall Street, European and Asia-Pacific investment banks made pitches to the Mongolian government over a few days to win the coveted underwriting mandate for the Tavan Tolgoi coal mine.

"It was bloody cold," said one banker who attended, citing temperatures of minus 25 degrees Celsius. "Ten or 12 government officials were there. They listened and asked good questions, which isn't always what you get with a government pitch."

Investment bankers who took part in the pitching process said the size of the offering could range from USD1.5 billion to USD5 billion, depending on timing. They declined to be named because they were not authorized to talk to the media.

Bankers completed their pitches in Ulaanbaatar on Tuesday and while a decision is expected by next week, sources said the timing could change. Listings on both the London and Hong Kong stock exchanges were being discussed, they added.

Banks who flew representatives in included Morgan Stanley , Macquarie Group Ltd , Citigroup Inc , JP Morgan Chase & Co , Deutsche Bank AG , Credit Suisse Group AG and UBS AG , the sources said. The banks declined to comment.

Mongolia plans to keep 51 percent of state-owned holding company Erdenes-Tavan Tolgoi, which controls the deposit, located in the South Gobi desert near China's northern border.About 30 percent of the asset is being sold to global investors through the IPO, sources say.

At up to USD5 billion, the deal is not only fairly big in terms of fees, but also has a lot of prestige riding on it. It would be the largest such offering to come from a hot frontier market where similar deals are expected to follow.