MUMBAI:Coal India Ltd (CIL) on Friday found more takers than the number of shares it could offer for sale. The world’s largest coal producer got about 1.1 times the number of bids for as many as 63.16 crores shares on sale at a floor price of Rs 358 apiece.
The country’s biggest share sale is the first major one off the mark for Modi government’s disinvestment process for the financial year to March 31. A successful disinvestment is critical for the government to meet its 4.1 per cent fiscal deficit target. Finance Minister Arun Jaitley has set a target to mop up Rs 43,425 crore from selling government stakes in public sector companies.
The 50.53 crore shares on sale to the non-retail segment got bids for 61.96 crore shares at an indicative price of Rs 358.50. Retail segment bid for 5.56 crore shares at an indicative price of Rs 360.11 compared with 12.63 crore shares that had been set aside for them for an estimated Rs 4,000 crore.
“The response to CIL share sale is indicative of investor’s confidence in India,” Aradhana Johri, disinvestment secretary told a news channel. About half of the sale may have been subscribed to by the Life Insurance Corp of India.
Accordingf to market sources, insurance firms bought CIL shares worth Rs 11,360.13 crore. LIC alone bought shares worth about Rs 7,000 crore. FIIs, including Fidelity, bought shares worth Rs 5,919 crore and banks bought shares worth Rs 2,500 crore while mutual funds invested around Rs 603 crore.
Retail investors, who were given five per cent price discount, put in bids worth Rs 1,852.55 crore. This amounted to less than half of 12.63 crore shares reserved for them.
Non-Institutional Investors bid for Rs 256.2 crore.
Depending on the oversubscription, the government is likely to get about Rs 22,557 crore for the 10 per cent share sale, which includes 5 per cent green shoe. In the secondary market, Coal India shares closed at Rs 360.85 per share, down 3.8 per cent.
Johri said more activity on the disinvestment front will henceforth be seen. The government has all the approvals and can go for share sale in any PSU at a short notice.
“Coal India OFS will increase the free float and bring in new investors in the company,’ said Piyush Jain, equity analyst at Morningstar India.
So far, the government has raised Rs 1,800 from the sale of its stake in Steel Authority of India Ltd shares.