The government’s offer for sale (OFS) of shares in Coal India received an overwhelming response from institutional (non-retail) investors on Thursday with the base issue size seeing subscription of 3.46 times on the first day.
About 10 per cent of the offer has been reserved for retail investors who get to bid on Friday.
Through the OFS, the Centre is looking to offer three per cent stake (including 1.5 per cent as green shoe) so as to mop up about ₹4,200 crore. On offer in base issue were 9.24 crore shares amounting to 1.5 per cent of the total holding.
Given the strong response from non-retail investors, the Government has now decided to exercise the green shoe option, which means another 9.24 crore share (1.5 per cent) would be issued under the OFS so as to shed three per cent in CIL.
“Offer for sale in CIL received enthusiastic response from non-retail investors today. The issue was subscribed 3.46 times of the base size. Govt has decided to exercise the green shoe option. Retail investors get to bid tomorrow”, Tuhin Kanta Pandey, DIPAM Secretary tweeted on Thursday.
Most of the bids received were at an indicative price of ₹225.14, closer to the floor price of ₹225.
Shares of Coal India were down 4.66 per cent on Thursday to end at ₹230 on the National Stock Exchange. For three days in a row, Coal India shares have fallen and corrected over seven per cent. In the last one year, shares have given more than 17 per cent returns. This was better than the 12 per cent returns given by the benchmark Nifty50.
This divestment in CIL by the government is the first in the current fiscal. Post divestment, government’s stake in CIL will come down to 63.13 per cent.
The OFS was announced within 24 hours of the company increasing prices of non-coking coal by eight per cent, which could bolster its revenues for current fiscal. Following this revision, CIL expects an incremental revenue of ₹2,703 crore for the balance period of current fiscal.