Despite Coal India Ltd (CIL) offer for sale being oversubscribed, the central government decided not to offload the entire shares it has earlier proposed to, thereby raising only a third of Rs 14,500 crore that it has earlier planned to raise through 9% stake dilution.
The government only offered a total of 19.8 crore or 3.19% equity shares for sale, which fetched around Rs 5,300 crore. It exercised greenshoe option to the extent of 0.19%, or 1.17 crore shares out of 37.24 crore shares proposed.
According to a company official, it was unexpected to see the government did not exercise the entire greenshoe option but the tepid demand from institutional investors on day 1 may be the reason why the government decided against offloading the entire stake through greenshoe option.
On the second day of the share sale, the retail portion was subscribed 1.56 times, which saw bids for 6.19 crore shares against a total issue size of 3.96 crore shares, as per data available on the National Stock Exchange.
The two-day offer for sale ended on Thursday, with the second day reserved for retail investors.
Coal India's share price closed 1.9% lower over the previous close at Rs 261.1 apiece on BSE, lower than the floor price of Rs 266 fixed by the government for the offer share. However, the shares closed well above the discounted price of Rs 253, at which the offer shares were available to retail investors.
In a disclosure on NSE on Wednesday, the coal ministry said that it will exercise the oversubscription option to the extent of 1.17 crore, or 0.19%, equity shares of the company in addition to 18.62 crore, or 3%, shares forming part of the base offer size. Accordingly, the offer shares will be 19.8 crore, or 3.19% shares of the company.
The share sale was criticised by the Coal India's trade unions, which said any stake dilution beyond the regulatory requirement cannot be accepted.
On the Day One of the offer for sale on Wednesday, institutional investors put in bids for 15.84 crore shares worth Rs 4,213.5 crore, an subscription of 1.06 times.
On Tuesday, the government announced its plan for an offer for sale as it aims to raise around Rs 14,000-14,500 crore by diluting 3% stake through offer for sale and an option to sell another 6% stake through greenshoe option.
As the government diluted the entire 3% to adhere to the regulatory requirement of minimum public holding of 25% in a listed entity and exercised 0.19% of over-subscription option, the government holding in the state-owned coal miner gets reduced to 75.13%.
The Coal India stake dilution was part of the government's proposed Rs 80,000-crore disinvestment plan in public sector units for the current fiscal. If the government has diluted the entire 9% stake, it would have added around Rs 14,000-14,500 crore to the public coffer.
In 2015, the government raised around Rs 22,557 crore by dilution of 10% stake in Coal India through an offer for sale.
SAILING THROUGH
- The government exercised the greenshoe option to the extent of 0.19%, or 1.17 crore shares out of 37.24 crore shares proposed
- On the second day of the share sale, the retail portion was subscribed 1.56 times with bids for 6.19 crore shares
