A workers unloads a sack of coal from a truck at a wholesale supplier’s in New Delhi. (Photographer: Prashanth Vishwanathan/Bloomberg)

Government Looks To Raise Up To Rs 15,000 Crore Through Coal India Share Sale

The Indian government is looking to sell up to nine percent of its stake in Coal India Ltd. over the next two days, as it seeks to shore up its divestment revenue.

The government will sell 18.62 crore shares, or three percent stake in the world’s largest coal producer, via an offer-for-sale, according to a stock exchange filing. If the offer gets over-subscribed, the government can exercise the greenshoe option, and sell an additional six percent equity.

The shares are earmarked at a floor price of Rs 266 apiece, with the offer-for-sale route scheduled to go live on separate windows of the stock exchanges at 9.15 a.m. on Oct. 31 and Nov. 1. Retail investors, who can bid for the OFS on Thursday, will get an additional 5 percent discount.

At the floor price, the government could mop up around Rs 5,000 crore from the sale of the 3 percent stake. If the additional 6 percent stake gets sold, then the government could raise nearly Rs 10,000 crore, taking the total haul to about Rs 15,000 crore.

The floor price of Rs 266 is at a discount of nearly 4 percent to Coal India’s closing price on Tuesday.

The government currently holds 78.32 percent stake in Coal India, and the offer-for-sale will help Coal India to conform to the minimum public holding norm of 25 percent.

Divestment Target

The Narendra Modi government has set a divestment target of Rs 80,000 crore for the year ending March 2019, and so far the Centre has managed to raise only Rs 10,028 crore through stake sales in state-owned companies.

The government has completed the follow-on-offer for the Bharat-22 Exchange Traded Fund, and initial public offerings of RITES Ltd., IRCON Ltd., Mishra Dhatu Nigam Ltd.and Garden Reach Shipbuilders Ltd. Coal India will be the first offer-for-sale in the current fiscal year.