India Seeks $2 Billion From Stake Sale in Largest Coal Miner

(Bloomberg) -- India will sell as much as 9 percent in monopoly miner Coal India Ltd. in a public offer starting Wednesday, according to a regulatory filing by the country’s coal ministry.

The federal government, which owns 78.55 percent in the world’s largest coal producer, will sell a 3 percent stake, or 186.22 million shares, with an option to sell an additional 6 percent, according to the filing. The minimum price for the offer is 266 rupees a share, which will fetch the government at least 148.6 billion rupees ($2 billion).

Coal India shares fell as much as 4.4 percent to 263.80 rupees in early trade in Mumbai on Wednesday, the biggest intraday drop since Oct. 5. The stock has declined about 7.1 percent in the past year, compared with a 2.3 percent gain in the benchmark S&P BSE Sensex.

The sale is part of Prime Minister Narendra Modi’s plan to raise 800 billion rupees through share sales this financial year to meet a budget deficit target and to fund infrastructure such as roads, power transmission lines and railway tracks ahead of elections next year. The government has raised 100.29 billion rupees selling state assets since April 1.

“Coal India’s earnings have bottomed out and the floor price is looking attractive,” said Rupesh Sankhe, an analyst at Reliance Securities Ltd. in Mumbai. “The demand for coal remains strong from all sectors and we expect the company to ramp up production now that the monsoons are over.”

Axis Capital Ltd., ICICI Securities Ltd., JM Financial Institutional Securities Ltd., Kotak Securities Ltd. and SBICAP Securities Ltd. will manage the sale, according to the filing.

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