India’s GVK Power and Infrastructure and Australia’s Hancock Prospecting have extended again a deadline for exclusive talks on two Australian coal mines until end August due to differences over valuation, two sources with direct knowledge of the matter said.
GVK’s negotiations for the roughly $1.3 billion deal with Hancock to buy the Alpha Coal and Kevin’s Corner mines began in February. The two sides had already extended the deadline twice before.
Some analysts have expressed doubts whether GVK, which the market values at about $685 million, would be able to pull off such a large acquisition.
GVK is expected to take loans from India’s No.2 lender ICICI Bank , Standard Chartered and domestic public sector lender Bank of Baroda to finance the deal, the sources said, declining to be identified as details were not public yet.
“The talks are very much on and GVK is very serious about it,” said one of the sources. “GVK is very careful in terms of valuation of the deal because there are some views that the rush for coal mines is pushing up sellers’ expectations.”
GVK, which constructs power plants and airports, declined to comment. Hancock was not immediately available for comment.
Shares in GVK were trading up 0.8 per cent at Rs 19.45 at 0705 GMT in a Mumbai market that was down 0.1 per cent. The GVK stock is down more than half this year compared to a 9 per cent fall in the main market.
India holds 10 per cent of the world’s coal reserves but local supplies are falling short of demand as the country builds more power plants, and as domestic coal projects run into environmental and land acquisition delays.
Indian energy firms have been scouting for coal assets overseas to feed power plants at home, and have been raising funds for potential overseas acquisitions and expanding facilities.
The energy-hungry nation aims to halve a near-14 per cent peak-hour power deficit within two years .
India’s Aditya Birla, JSW Steel and Jindal Steel & Power are among firms shortlisted to bid for Australian coal explorer Bandanna Energy in a potential billion-dollar-plus sale, sources said in May.
3i India Infrastructure Fund, managed by UK private equity firm 3i Group , invested about $180 million in the energy unit of GVK in November last year to fund the expansion of output capacity.