Coal India Stake Sale: On Day 1 Institutional Portion Oversubscribed, Receives Rs 6,500-Crore Bid

With institutional OFS being oversubscribed 1.6 times more than the shares offered, the government's first major disinvestment drive of the financial year 2023-24 is being considered a success

The government currently holds 66.13 per cent of Coal India Limited.

Source : Getty

Institutional investors submitted bids worth Rs 6,500 crore on the first day of Coal India's (CIL's) Rs 4,160 crore offer for sale (OFS). With institutional OFS being oversubscribed 1.6 times more than the shares offered, the government's first major disinvestment drive of the financial year 2023-24 is being considered a success.

According to a report by Bussines Standard, the majority of bids were around Rs 226 per share, slightly higher than the government's set floor price of Rs 225 for the OFS. Over the past year, the state-owned miner's shares have traded at an average price of Rs 220, the report added. 

The government has offered over 8.31 crore shares to institutional investors under the offer-for-sale (OFS) but received bids for 28.76 crore shares or 3.46 times, informed Department of Investment and Public Asset Management Secretary Tuhin Kanta Pandey via a tweet. At the indicative price of Rs 226.12 a share, the bids of institutional buyers are worth Rs 6,500 crore.

"Offer for Sale in CIL received enthusiastic response from non-retail investors today. The issue was subscribed 3.46 times of the base size. The government has decided to exercise the green shoe option. Retail investors get to bid tomorrow," Department of Investment and Public Asset Management Secretary Tuhin Kanta Pandey tweeted.

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. pic.twitter.com/zmj6y7NsVU

— Secretary, DIPAM (@SecyDIPAM) June 1, 2023

The government currently holds 66.13 per cent of Coal India Limited. The stake sale in Coal India will help the government inch towards the Rs 51,000-crore disinvestment target set for the current fiscal.

During the two-day offer for sale (OFS), the government plans to sell over 18.48 crore shares, representing a 3 per cent stake, in the PSU coal producer at a floor price of Rs 225 per share. The sale also includes a green-shoe option of 1.5 per cent in case of oversubscription. Coal India's shares closed at Rs 230.55 apiece on the BSE, witnessing a 4.42 per cent decline compared to the previous closing price.

Shares worth Rs 415 crore reserved for retail investors will be auctioned on Friday. The oversubscription from institutional investors will help make up for the demand shortfall in the retail category, if any.