Mechel Mining, an ore mining subsidiary of Russia's leading metals company Mechel, plans to hold an Initial Public Offering this fall on the London Stock Exchange and is choosing lead managers, a banking source said on Tuesday.
"Yes, they will go to London. They have considered Hong Kong and New York, then abandoned Hong Kong and have recently gave up the idea of New York," the source told RIA Novosti.
Speaking about IPO lead managers, the source said: "They are not yet chosen, they are negotiating actively and watching."
Banking sources have previously said the company planned to raise over $1 billion in a share sale in London. On Monday, Troika Dialog investment house valued the company at $18-19 billion.
Last week Mechel Mining approved a new share issue amounting to 25 percent of the company's equity. The additional issue may bring Mechel Mining about $3.3-4 billion including discount, Troika Dialog said in a research note.
Sources have said that Mechel Mining needed funds to ease its debt burden and invest in the development of the Elga coal deposit in the north of Russia.
"The company has enough free cash flow to finance capital investments, so it is quite obvious that management needs money for other purposes," said Troika Dialog, adding the company may be seeking financing for a large acquisition.