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Mercator Ltd is looking to raise $300 million, or about Rs 1,910 crore, by selling its coal assets in Indonesia and Mozambique, and selling stake in its dredging division to bulge bracket private equity funds, to build a war chest for future growth.
The diversified marine operator is in talks with Canadian billionaire Prem Watsa-promoted Fairfax Financial Holdings and US private equity giants KKR and Blackstone to make a joint bid for state-run Dredging Corporation of India, in which the government is looking to sell its entire 74% stake, multiple people close to the development told ET.
Also, Indian and Chinese players are in the fray to buy Mercator's 50% stake in three East Kalimanthan coal assets in Indonesia and one asset in Mozambique, they said. “Mercator has decided to exit the coal business as it is no longer a core business to the group,“ said one of the sources cited earlier. “We expect the transaction to get concluded within the next two quarters."
Mercator expects divestment to fetch Rs 1,2001,500 crore. Nomura is helping the company sell coal assets, sour ces said. Mumbai-based investment bank Singhi Advisors is running a process for Mercator to raise funds for its dredging unit, sources said.
Dredging Corporation of India -for which Mercator plans to bid jointly with private equity majors -is the largest dredging company in the country and the only public sector enterprise in the sector with a fleet of 19 dredgers.
When contacted, Mercator, KKR, Blackstone and Mercator declined to comment. A mail seeking comments from Fairfax remained unanswered as of press time on Tuesday. Founded in 1983, Mercator is a diversified conglomerate with interests in shipping, logistics, dredging and coal.
Mercator acquired coal assets in Mozambique in 2008-09 and bought Indonesian assets in 2011. It has 50% participatory interest three coal blocks in Indonesia's East Kalimanthan region and owns the allied infrastructure facilities, while the Mozambique assets is yet to start commercial operations. The company has decided to gradually step down from coal as it was not generating expected returns.
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