Government to Sell 3% Stake in Coal India Limited via OFS
The Indian government is planning to sell a 3% stake in Coal India Limited through an offer-for-sale (OFS) that will be made available to non-retail investors on June 1. Retail investors will be able to place bids on June 2. The government is hopeful of raising around INR 4,000 crore ($550 million) through this OFS. SBI Capital Markets has been appointed as the broker for this deal.
Details of the OFS
– The floor price for the OFS has been set at INR 225 per share, which is approximately 7% lower than the current market price.
– The stake being sold includes a green shoe option of 1.5%.
– The government is planning to sell its stake through the BSE and NSE stock exchanges.
Previous Reports on Government’s Stake Sale Plans
In November 2022, Bloomberg had reported that the Indian government was considering selling a 5-10% stake in Coal India Limited, Hindustan Zinc, and Rashtriya Chemicals and Fertilizers to boost revenue and take advantage of the stock market’s bull run.
Coal India Limited’s IPO
Coal India Limited is India’s largest coal mining company and had gone public in 2010 by selling a 10% stake at INR 245 per share, raising INR 15,200 crore ($2.1 billion). The company’s IPO had seen heavy demand from investors, and its shares had surged after listing.
Impact of Stake Sale on Coal India Limited
The stake sale is likely to result in a reduction in the Indian government’s shareholding in Coal India Limited from 66.1% to 63.1%. The sale is expected to increase the company’s public float, which could lead to higher liquidity and better price discovery for its shares. The stake sale could also help the government raise funds to bridge its fiscal deficit, which has widened due to the economic impact of the COVID-19 pandemic.
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