Coal India OFS Day 1: Strong response from non-retail investors, base issue subscribed 3.46 times

Government offer for sale (OFS) of shares in India coal It received an overwhelming response from institutional (non-individual) investors on Thursday with the underlying issue volume reaching 3.46 times on the first day.

About 10 percent of the offer has been reserved for retail investors who will be bidding on Friday.

Through OFS, the center is looking to offer a stake of 3 per cent (including 1.5 per cent as a green shoe) so as to dispose of around Rs 4,200 crore. Rs. 9.24 crore shares offered in the basic issue amounting to 1.5 per cent of the total holding.

Owing to the strong response from non-retail investors, the government has now decided to exercise the green shoe option, which means issuing another Rs 9.24 crore (1.5 per cent) under OFS so as to get rid of three per cent in CIL.

“An offer for sale in CIL has received an enthusiastic response from non-retail investors today. The issue is oversubscribed at 3.46 times the underlying volume. Government has decided to exercise green shoe option. Retail investors will bid tomorrow,” Tweeted Tohin Kanta Pandey, Secretary of DIPAM on Thursday.

Most of the bids received were at a guide price of INR 225.14, closer to the minimum price of INR 225.

Shares of Coal India fell 4.66 percent on Thursday to close at 230 rupees on the national stock exchange. For three consecutive days, shares of Coal India fell and corrected more than seven percent. Last year, the stock returned more than 17 percent. This was better than the 12 percent returns offered by the Nifty50 benchmark.

This divestment of the CIL by the government is the first in the current fiscal. After divestment, the government’s stake in CIL will decrease to 63.13 percent.

OFS was announced within 24 hours of the company increasing non-coking coal prices by eight percent, which could boost its current fiscal revenue. After this review, CIL expects additional revenue of ₹2,703 crore during the balance period of the current financial year.