Wave of Mongolia Resource IPOs is Heading toward Hong Kong

IPO Wave is Coming! Earlier this year, the Hong Kong Stock Exchange (HKEx) has witnessed the first full-fledged IPO of a Mongolia-focused resource company. SouthGobi Resources, a Mongolian coal miner raised over US$460mn on the HKEx in January 2010. Last week Reuters reported that Energy Resources, another Mongolian coal miner plans to launch its IPO in Hong Kong later this year. We expect that at least a dozen of Mongolian resource companies and conglomerates to raise capital in Hong Kong in the next three years.

Hong Kong is “a natural choice” for Mongolian IPOs. “Hong Kong is a natural choice in terms of funding and expertise for Mongolia”, Sukhbaatar Batbold, Prime Minister of Mongolia stated in April this year in Hong Kong. In our view, a number of positive factors such as Mongolia’s strategic proximity to China, strong interest from HK and Asia-based investors, Mongolia and Hong Kong being in the same time zone and growing Mongolia-focused peer group at the HKEx provides Hong Kong with a competitive advantage over its global rivals like London and Toronto to lure Mongolian resource companies to Asia’s largest stock exchange, ex-Japan.

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