The GVK Group today said that several strategic investors have approached the company to take part in the development of the Hancock mines, which will require investment of $10 billion over three years.
The Hyderabad-based diversified group on Friday last announced the deal to acquire Hancock mine assets for $1.26 billion.
“This is the biggest project of the GVK group requiring Rs 60,000 crore. The investors engaged in coal mining are keen to take part as strategic partners. This also includes interest from an Indonesian mine developer,” said Mr Issac A. George, Chief Financial Officer and Director, GVK Industries Ltd.
Speaking to newspersons on the sidelines of Suminfra 2011, Mr George said the company managed to outbid companies from China, the US and India. Ms Georgina Rienhart of Hancock was comfortable dealing with us, he added.
STAKE DIVESTMENT
“An independent company is handling this deal as GVK PIL is not into commodity business. We have two mines with 79 per cent stake and one with 100 per cent stake. There is flexibility to divest and hold up to 51 per cent to remain majority stakeholder,” he said.
“The funds (about $1.26 billion) for the acquisition have already been tied up from Indian banks. It is only project finance that is required to be closed in 18 months. We will be able to do it as there is a tremendous amount of investor interest both financial and strategic,” he said.
FOREIGN BANKS
GVK expects to tap Australian and other international banks for debt as Indian banks would not like to take non-recourse finance risks overseas. But European and Australian banks are open to fund debt requirement, he felt.
Typically, such projects are funded with debt-equity ratio of 70:30. So of the $6 billion required, $1.8 billion would come from equity through strategic and financial investors and about $4.2 billion would be debt. Effectively, about $2.8 billion would be raised. The project cost would be pruned to $7 billion.