Bloomberg/Mumbai


India’s biggest asset sale to help raise at least $3.6bn selling shares of Coal India got a boost as the offer was fully subscribed by investors.
Bidding reached 662mn shares for the 631.6mn on offer, or 10% of the government’s stake that included the greenshoe option, according to data provided by BSE. The government had set a minimum price of Rs358 a share for the planned sale of 5% of its stake, with an option to sell an additional 5%.
The success at yesterday’s sale may provide a fillip to the government’s flagging programme to raise money from such offerings. Falling oil prices and proceeds from the sale will help Prime Minister Narendra Modi meet his target to cut a budget shortfall to the lowest in seven years.
“It’s a monopoly business and will benefit from the Modi government’s focus on the power sector,” said Paras Bothra, vice president of equity research at Ashika Stock Broking in Mumbai. “It’s a good bet for the institutional investors.” The 10% sale in Coal India will potentially make it the nation’s biggest public offering, according to data compiled by Bloomberg.
In the current financial year ending March 31, counting out yesterday’s Coal India auction, the government had managed to meet only 3% of its goal of raising Rs584bn ($9.4bn) from its asset sale programme. It has missed its targets every year since fiscal 2011.
Prior to the sale, the government owned 89.65% in the monopoly miner. Individual investors, who got a 5% discount to the minimum bid price, bid for less than half of the shares offered to them.
“Retail investors may not have the patience to hold the stock for three to five years,” Bothra said. “In a bull market there are many options in the mid-cap space for them to invest.” Coal India shares fell 3.8% to Rs360.85 in Mumbai yesterday. The stock has declined 5.9% this month, compared with a 6.1% gain in the benchmark S&P BSE Sensex, the world’s best performer this year in dollar terms.
Bank of America Corp, Credit Suisse Group AG, Deutsche Bank AG, Goldman Sachs Group Inc, JM Financial, Kotak Mahindra Bank and SBI Capital Markets were managers to the sale.