Coal India offer for sale: Institutional buyers' portion over-subscribed; bids worth over Rs 4,200 cr received

New Delhi: The government’s three percent stake sale in Coal India saw a strong response from institutional investors who bid for shares worth over Rs 4,200 crore and the shares reserved for them got over-subscribed in the opening day on Wednesday. The two-day offer for sale (OFS) will open for retail investors tomorrow. This is the first big-ticket share sale and first offer for sale (OFS) of the government in current fiscal. If fully subscribed, a three percent Coal India (CIL) stake sale will fetch Rs 5,000 crore to the exchequer. Of the 14.89 crore share on offer, institutional investors put in bids for 15.83 crore till 3:25pm. This is 1.06 times the shares reserved for institutional buyers, as per data available with NSE. [caption id=“attachment_4500709” align=“alignleft” width=“380”] Representational image. Reuters.[/caption] At the floor price of Rs 266, the sale of 15.83 crore shares will amount to over Rs 4,200 crore. The number could go up further as bidding will continue till 3.30 pm. Updated data was not available till the time of releasing this report. However, defying a broader market trend, Coal India scrip slipped to a low of Rs 263.80 apiece during intra-day trade. The scrip closed down 3.73 percent over the previous close on the BSE at Rs 265.60 – below the floor price of the OFS. The BSE benchmark Sensex ended 550.92 points up at 34,442. The government is selling over 18.62 crore shares or three percent in Coal India Ltd (CIL) at a floor price of Rs 266 apiece. The government also has an option to retain an over-subscription of another six percent stake in the CIL OFS. Bidding by retail investors will open Thursday and a 5 percent additional discount would be offered to these investors, who bid for shares worth not more than Rs 2 lakh. At a floor price of Rs 266 apiece, the sale of over 18.62 crore shares would fetch Rs 5,000 crore to the exchequer. If the additional 6 percent stake or 37.24 crore shares are put on the block, then the government could get a further about Rs 10,000 crore. Taken together, the nine percent stake sale in CIL could fetch about Rs 15,000 crore to the government. The floor price of Rs 266 a share was at a discount of nearly 4 percent or Rs 11 a share over Tuesday’s closing price of CIL scrip on the NSE. The government had last sold 10 percent stake in CIL through an OFS in January 2015. It had then mopped up about Rs 23,000 crore. The government currently holds 78.32 percent stake in Coal India. The government has already raised over Rs 10,028 crore through PSU stake sale, including by way of follow-on offer of Bharat-22 ETF, and initial public offering of four PSUs – RITES, IRCON, Mishra Dhatu Nigam Ltd (MIDHANI) and Garden Reach Shipbuilders. The stake sale in Coal India would help the government move forward towards the Rs 80,000 crore disinvestment target in current fiscal.