Indian billionaire G.V. Krishna Reddy wants to acquire a stake in Hancock Prospecting, owned by Gina Rinehart, Australia's richest woman. He agreed to pay $1.26 billion to acquire a 79 percent share in the coal assets, Bloomberg reports.

Reddy owns airports and construction companies that build power plants and roads. To finance his buy-in, he will sell his ownership of GVK Coal Developers in Singapore in the next three to six months.

Besides the coal mine, Mr Reddy also plans to acquire a stake in a railway line and port projects owned by Rinehart. The Indian billionaire sought the buy-in because of the access it would provide him to coal for new power plants that GVK will build.

GVK and other Indian companies are buying coal assets overseas, mainly in Australia and Indonesia, to ensure sufficient coal stock to power their electricity needs for steel plants and other manufacturing facilities, which have been the main drivers of India's fast-paced economy.

Besides the buy-in, GVK would need to spend a total of $2.1 billion, which includes development costs. To fund the entire deal, aside from selling company assets in Singapore, GVK will borrow $1 million, said GVK Financial Officer Isaac George, who disclosed the company's plans to go into coal commodity trading.

Reddy aims to produce 84 million metric tons of coal yearly, and production was initially scheduled to begin in 2014 at 30 million tons. To develop the first phase of output, GVK estimates it needs $10 billion.

"We have a feeling that the project development cost can be significantly brought down to $7 billion ... This can happen through cost optimization and outsourcing a range of activities, such as coal washing and laying rail tracks," Reddy told Bloomberg.

Rinehart said she expects the transaction to close by the end of September.