Fixing the unit share price at the Erdenes Tavantolgoi IPO will be tricky

By S.Bold-Erdene

The Government has  finally and formally set up Erdenes Tavantolgoi LLC. The company will have 15 billion shares, of which 1.5 billion will be given free to Mongolian citizens and another 1.5 billion offered to national companies at a predetermined price. Of the rest, the talk so far is that 4.5 billion more shares, or 30% of the total, will be offered, first for sale, and then for trade, at stock exchanges, national and international.

What will be the offer price of a share in Erdenes Tavantolgoi? How much will it finally sell for? How much money will the company be able to raise? What will be deemed the market value of the company?  Nobody, Minister or investment analyst, can answer any of these questions for sure now. All we can do is to make some calculations, taking the recent IPO figures as a benchmark.

There was some talk of an initial public offering (IPO) soon after Parliament adopted Resolution No.39 on July 9, deciding to establish the company. Expert advice recommended delay, as Energy Resources (now known as Mongolia Mining Corporation), which conducts mining on a certain part of Tavantolgoi, was in an advanced stage of preparing for an IPO on the Hong Kong Stock Exchange.

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