Govt considering to allow coal SPV access to sovereign funds
Govt is considering allowing Coal Ventures International Limited, the SPV formed by leading metal and mining PSUs to acquire coal mines abroad.
By PTI |
NEW DELHI: Government is considering allowing Coal Ventures International Limited, the SPV formed by leading metal and mining PSUs to acquire coal mines abroad, access to sovereign funds while expediting the process of shortlisting three global merchant banks to advise them in acquisitions.
"At least 15 global merchant banks had reciprocated in response to our Expression of Interest for advising the SPV on scouting for coal properties abroad and help in doing due diligence. We will finalise at least three such banks within two months," a senior government official told PTI.
The CVIL was formed by state-run PSUs like Coal India Limited (CIL), Steel Authority of India Limited, National Thermal Power Corporation (NTPC), Rashtriya Ispat Nigam Limited (RINL) and NMDC Limited.
The CVIL would have an initial capital base of Rs 3500 crore, which would be taken up to Rs 10,000 crore, to secure coal properties abroad including Australia, Canada and Africa, the official said and pointed out that once finalised the advisors would soon begin their due diligence and scout for coal properties.
"Besides, we are also considering to allow CVIL access to sovereign funds to enable them to carry out acquisitions and mergers," he said. Sovereign fund is a state-owned fund composed of financial assets like stocks, bonds, property or other financial instruments.
The Union Cabinet gave its go-ahead to the SPV in November 2007.
"But in course of our interaction with bankers recently, we found that the SPV partners will have to pool in more resources as the money outlayed for acquiring coal properties abroad may be grossly insufficient. Acquisition of majority stake in any overseas mines will entail an expenditure of at least 5-6 billion dollars," the official said.
"At least 15 global merchant banks had reciprocated in response to our Expression of Interest for advising the SPV on scouting for coal properties abroad and help in doing due diligence. We will finalise at least three such banks within two months," a senior government official told PTI.
The CVIL was formed by state-run PSUs like Coal India Limited (CIL), Steel Authority of India Limited, National Thermal Power Corporation (NTPC), Rashtriya Ispat Nigam Limited (RINL) and NMDC Limited.
The CVIL would have an initial capital base of Rs 3500 crore, which would be taken up to Rs 10,000 crore, to secure coal properties abroad including Australia, Canada and Africa, the official said and pointed out that once finalised the advisors would soon begin their due diligence and scout for coal properties.
"Besides, we are also considering to allow CVIL access to sovereign funds to enable them to carry out acquisitions and mergers," he said. Sovereign fund is a state-owned fund composed of financial assets like stocks, bonds, property or other financial instruments.
The Union Cabinet gave its go-ahead to the SPV in November 2007.
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"But in course of our interaction with bankers recently, we found that the SPV partners will have to pool in more resources as the money outlayed for acquiring coal properties abroad may be grossly insufficient. Acquisition of majority stake in any overseas mines will entail an expenditure of at least 5-6 billion dollars," the official said.
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