Centre to offload 9% in Coal India

The government has decided to divest a 9 per cent stake in Coal India through a two-day offer for sale starting Wednesday, which is expected to fetch the Centre about Rs 14,000 crore at the floor price, including a greenshoe option.

The offer consists of 186.2 million shares equivalent to 3 per cent of the stateowned company’s equity at a floor price of Rs 266 a share, which is at a 3.6 per cent discount to Tuesday’s closing price. The government has the option to sell an additional 372.4 million shares or 6 per cent of the equity, Coal India said in a stock exchange filing on Tuesday.

Coal India shares declined 3.9 per cent to Rs 275.90 at the close on the BSE on Tuesday. The stock had risen from Rs 263.05 on October 5.

The management, under instructions from the coal ministry, had conducted roadshows for large institutional investors in the UK, Singapore and Hong Kong in June and July in preparation for the stake sale.

The offer for sale opens on Wednesday for institutional bidders. Retail investors can bid for 20 per cent of the shares that have been reserved for them on Thursday and will get a 5 per cent discount. Coal India employees, for whom a 5 per cent stake has been set aside, will also get a 5 per cent discount on the final offer price.

The government sold a 10 per cent stake in Coal India through an offer for sale in January 2015 and had mopped up about Rs 23,000 crore.

The Centre holds a 78.32 per cent stake in Coal India and needs to sell more shares in order to comply with the mandatory 25 per cent public holding requirement.

“The norm required Coal India’s public holding to be at least 25 per cent by August 21 this year. However, the deadline was recently extended by two years,” said a senior Coal India executive.

The original deadline for complying with the 25 per cent public holding norm was August 21 last year. The government decided to skip the last round of divestment in Coal India as its scrip price had dipped significantly. Initial plans included divesting between 5 per cent and 10 per cent by August 2017 to raise Rs 20,000 crore.

Brokers for the offer for sale are Axis Capital, ICICI Securities, JM Financial, Kotak Securities and SBICAP Securities.