Government of Singapore Investment Corporation (GIC), a sovereign wealth fund owned by the Singapore government, has begun talks with the GVK Group, an airport developer and power producer in India, to purchase a stake in GVK Coal Developers Singapore, the holding company that owns Australia?s Hancock Coal, two people familiar with the development said.

?We are in talks with a couple of investors to sell a part of our stake in mines and the infrastructure linked to the mines,? Issac George, GVK Group financial officer, said in a telephonic interview. ?If we are raising money at the holding company level, a part of the money will be used to retire a part of the debt and the rest to develop infrastructure and to explore coal.?

The group, which won the licence to own and operate the Mumbai International Airport, has appointed investment bankers Macquarie and Citi to find investors for its mines and infrastructure assets.

?We want to finalise the deal at the earliest,? George said without identifying the investors they are in talks with or the amount they need to raise.

?The company is valued at $2 billion, a rise of roughly $800 million,? said one of the two people familiar with the development. But other coal mine owners say valuation could rise only after they receive all regulatory clearances from the Australian government.

?It would not have increased yet,? managing director of a coal mine developer in Indonesia said on condition of anonymity. ?But future demand from China and India could drive value.?

GVK, owned by GVK Reddy who built India?s first fast track power project in 2000 in Andhra Pradesh, purchased the Australian company in September 2011 for $1.26 billion with $1 billion borrowed money.

GVK bought a 79% stake in the Alpha and Alpha West thermal coal projects in Queensland?s Galilee Basin and 100% of the Kevin?s Corner coal project next to Alpha and the rail and port project linking to the Abbot Point terminal. The remaining 21% in the Alpha coal projects is owned by Australia?s richest woman Gina Rinehart?s Hancock Prospecting.

According to the agreement, GVK had to pay Hancock Group in phases ? $ 500 million soon after closing the deal, and $200 million in the next one year. The rest $560 million needs to be paid while achieving financial closure of the project, but not later than three years from closing the deal, GVK Group said on its website.

?GVK will sell down its stakes across Alpha, the rail and the port, but will maintain a majority,? said Paul Mulder, chief executive of Hancock Coal, the Australian arm of GVK, to a news agency in March 21, 2012. ?The process is under way.?

?We expect to close the deal in the next four months,? George said.

GIC did not respond to an email questionnaire from FE. ?We invest globally in asset classes ranging from public equities to real estate from fixed income to buyout funds, from natural resources to infrastructure,? the sovereign wealth fund said on its website. The fund had invested least in Australasia at 3% as against 42% in America, 28% in Europe and 27% in Asia. The fund had invested $100 billion until now in 40 countries and in India it opened an office last year.

?If you put it in perspective and say where the next wave of reliably supplied, low-cost, low-ash, low-sulphur coal is coming from, with a fully integrated mine, rail and port system, in a low sovereign risk jurisdiction, there?s only one place and it?s called Australia, and it?s called the Galilee Basin,? Mulder told the wire agency in March.

Indian power producers are caught in a bind over the shortage of cheaper domestic coal and expensive imports. ?Domestic coal is 50% cheaper than imports,? said Kuljit Singh, partner, infrastructure at consulting firm Ernst and Young India. Coal India, the largest coal supplier has predicted a coal shortage of 142 million tonnes in fiscal 2012.