Coal India Ltd (CIL) public offer, the biggest public issue ever in India seeking to raise over Rs 15,000 crore, was oversubscribed over 14 times at the end of the issue on Thursday with investors applying for shares worth a whopping $52 billion, a new record for Indian primary market.
Arguably the previous best issue was that of Reliance Power that received applications for shares worth around Rs 1.9 lakh crore in early 2008, compared with Rs 2.3 lakh crore for Coal India.
While the early rush of investors putting in money to subscribe to the issue were institutional investors with the QIB segment being oversubscribed almost 24 times on day 3 led by foreign institutional investors (FIIs), non institutional investors that includes high net worth individuals and corporates also joined the rush with a similar oversubscription at the end of the issue.
Retail investors also participated fairly well applying for twice the quantum of shares reserved for the category however, despite all the brouhaha about employees (including blue collared) around the country rushing to open demat accounts, less than 10% of the employee portion was subscribed. While one challenge to this was getting employees residing in interiors to open demat accounts, this was also due to a call by employee unions not to go for the issue.
The stock market that has been showing bearish tone over the last few days shot up around 1.9% on Thursday as investor appetite for equity market became visible with the issue.
A navratna company Coal India is the world’s largest coal producer with over double the reserves compared to the second largest coal firm US-based Peabody Energy. It accounts for around 82% of India’s total coal production and the government that owns 100% stake as of now, is looking to raise up to Rs 15,475 crore ($ 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.