Govt's Coal India offer for sale opens for institutional buyers; scrip tanks 3% to Rs 267

New Delhi: The Government’s three percent stake sale in Coal India at a floor price of Rs 266 apiece opened for bidding by institutional investors Wednesday with a subscription of over 24 percent shares on offer in initial hours of trade. This is the first big-ticket share sale and first offer for sale (OFS) of the government in current fiscal, which will fetch at least Rs 5,000 crore to the exchequer. However, following a broader market trend, Coal India scrip slipped to Rs 266.95 apiece, down 3.24 percent over the previous close on the BSE. The government is selling over 18.62 crore shares or 3 percent in Coal India Ltd (CIL) at a floor price of Rs 266 apiece. Of this, 14.89 crore share are offered to institutional investors Wednesday. [caption id=“attachment_4500709” align=“alignleft” width=“380”] Representational image. Reuters.[/caption] The government also has an option to retain an over-subscription of another 6 percent stake in the CIL OFS. According to NSE data, subscription for over 3.64 crore shares or 24 percent of the shares on offer came in by 11:25 am. Bidding will go on till end of trading hours. 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 9 percent stake sale in CIL could fetch about Rs 15,000 crore to the government. The floor price of Rs 266 a share is 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. Coal India is the first PSU OFS of the current fiscal. 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.