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Blockbuster Offer: Coal India Issue Fully Subscribed

19 October, 2010

Coal India Ltd (CIL) public offer, the biggest public issue ever in India seeking to raise over Rs 15,000 crore, was fully subscribed (1.7 times) on the second day after opening on Monday.

As expected, the early rush of investors putting in money to subscribe to the issue were institutional investors with the QIB segment being oversubscribed 3.4 times on day 2 led by foreign institutional investors (FIIs). The QIB portion of the issue closes for subscription on Wednesday, ahead of the issue closure for retail shareholders.

Non institutional investors comprising HNIs among others have subscribed to around half of the maximum shares reserved for them.

Retail investors bought around a third of the portion reserved for them and despite all the brouhaha about employees(including blue collared) around the country rushing to open demat accounts, just about 1% of the employee portion was subscribed as on day 2.

The stock market has been playing true to analyst fears that a huge issue like Coal India will see investors moving money from secondary market to pick shares of the state-owned coal producer that has apparently left enough room for listing day gains.

The 30-stock benchmark index Sensex traded marginally above the previous day’s closing but closed 0.9% at the end of Tuesday.

A navratna company Coal India is the world’s largest coal producer with over double the reserves compared to the second largest coal firm US-based Peabody Energy. It accounts for around 82% of India’s total coal production and the government that owns 100% stake as of now, is looking to raise up to Rs 15,475 crore ($ 3.4 billion) by selling 10% stake as part of its disinvestment programme to raise money for reducing fiscal deficit.

At the upper end of the price band the company will be valued around Rs 1.54 lakh crore ($34.7 billion), making it the seventh most valued firm in the country, behind Reliance Inds, ONGC, SBI, TCS, Infosys and NTPC.


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Blockbuster Offer: Coal India Issue Fully Subscribed

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