By Vinu Lal & MV Ramsurya, ET Bureau
BANGALORE/MUMBAI: Three top Indian companies have joined the race to bid for the coal assets of one of Australia's largest thermal coal explorers - Bandanna Energy - in a deal that could be valued at $1.5 billion. GVK, state-owned consortium ICVL and Reliance Power have shown early interest in bidding for the assets estimated to have reserves of over 1.3 billion tonnes of thermal coal, said people familiar with the development.
Bandanna Energy has initiated an auction process to sell the assets and has mandated UBS to advise it on the transaction. The last date for submission of bids is March 31, 2011.
An information memorandum circulated among bidders, a copy of which is with ET, indicate that the company has $750 million worth assets. A feasibility study on some of its coal assets completed last month, soon after which the sale process was kicked off.
Thermal coal is used by utility coal-fired power plants. Expanding capacities by companies in various industries have led to a rise in power consumption. While India is also rich in thermal coal deposits, high ash content in local coal and reduced production by Coal India, has prompted most user companies to scout global resource rich nations to tap for coal assets.
A GVK spokesperson did not reply to an email query sent by ET. Senior officials from GVK are currently in Australia. A Reliance Power spokesman denied the company is considering bidding for the coal assets. A senior ICVL executive said that the company was evaluating all options with respect to coal assets in Australia. "We have a board meeting scheduled on March 21 where we will take a call on all bids," he added. ICVL comprises of mining major NMDC, utility NTPC , steelmakers SAIL and Rashtriya Ispat Nigam , and Coal India.
Bandanna chairman Jeremy Barlow did not respond to an email query.
Bandanna would look at selling both minority or majority stake in its ongoing projects as well as explore the possibility of selling the entire entity as a whole. According to a person close to the bidder, current discussions initiated by the banker relate to a possible entity level sale rather than piecemeal project-level sale. "It is typical for a project as large as this to initially explore entity level interests than piecemeal selloffs," said the person.
Bandanna Energy has exploration licences for 16 blocks in the Bowen and Galilee Basins in Queensland. The company also has shale gas assets in the region. Six founder shareholders led by chairman Jeremy Barlow, own close to 70% stake in the listed Bandanna Energy.
Local demand for coal reported a compounded annual growth rate of over 8% during a five-year period till FY2010, to reach almost 600 million tonnes last year. The demand from the power sector, which accounts for over 70% of the country's overall coal demand, has been a major driving force, said a recent report by ICRA.
Bandanna Energy has initiated an auction process to sell the assets and has mandated UBS to advise it on the transaction. The last date for submission of bids is March 31, 2011.
An information memorandum circulated among bidders, a copy of which is with ET, indicate that the company has $750 million worth assets. A feasibility study on some of its coal assets completed last month, soon after which the sale process was kicked off.
Thermal coal is used by utility coal-fired power plants. Expanding capacities by companies in various industries have led to a rise in power consumption. While India is also rich in thermal coal deposits, high ash content in local coal and reduced production by Coal India, has prompted most user companies to scout global resource rich nations to tap for coal assets.
A GVK spokesperson did not reply to an email query sent by ET. Senior officials from GVK are currently in Australia. A Reliance Power spokesman denied the company is considering bidding for the coal assets. A senior ICVL executive said that the company was evaluating all options with respect to coal assets in Australia. "We have a board meeting scheduled on March 21 where we will take a call on all bids," he added. ICVL comprises of mining major NMDC, utility NTPC , steelmakers SAIL and Rashtriya Ispat Nigam , and Coal India.
Bandanna chairman Jeremy Barlow did not respond to an email query.
Bandanna would look at selling both minority or majority stake in its ongoing projects as well as explore the possibility of selling the entire entity as a whole. According to a person close to the bidder, current discussions initiated by the banker relate to a possible entity level sale rather than piecemeal project-level sale. "It is typical for a project as large as this to initially explore entity level interests than piecemeal selloffs," said the person.
Bandanna Energy has exploration licences for 16 blocks in the Bowen and Galilee Basins in Queensland. The company also has shale gas assets in the region. Six founder shareholders led by chairman Jeremy Barlow, own close to 70% stake in the listed Bandanna Energy.
Local demand for coal reported a compounded annual growth rate of over 8% during a five-year period till FY2010, to reach almost 600 million tonnes last year. The demand from the power sector, which accounts for over 70% of the country's overall coal demand, has been a major driving force, said a recent report by ICRA.
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