At Rs 245, Coal India IPO will mop up Rs 15,200 cr

Source :Business Bureau:New Delhi, Oct. 25

The Centre will mop up around Rs 15,200 crore from the Coal India IPO, with the Empowered Group of Ministers (EGoM) on Monday fixing the issue price for the mega share sale at Rs 245 a share. Coal India shares will get listed on November 4.

The issue price has been fixed at the top end of the Rs 225-245 price band. Retail investors will get a five per cent discount, that is, shares will be allotted to this category at Rs 232.75 a share.

“The issue price has been fixed at Rs 245 per share. The Government will raise over Rs 15,000 crore,” Mr Sriprakash Jaiswal, Coal Minister, told reporters here after the EGoM meeting.

Mr Jaiswal said that the IPO was subscribed 15.3 times and the issue had attracted a total of Rs 2.33 lakh crore. The Minister said the Government does not plan to retain funds in excess of Rs 15,200 crore, though the demand for the shares far exceeded the number on offer.

The Centre had in the 10 per cent stake sale offered 63.16 crore shares. There was tremendous response, with the total demand at 960.32 crore shares or nearly 15 times that on offer

Coal India IPO fetches mind-boggling Rs 2.36L crore

Source :Partha Sinha, TNN, Oct 22, 2010, 12.37am IST





 The Indian capital market turned black into gold this week. The initial public offer of Coal India was set to be the largest in Indian history from the moment it opened on Monday, but even the biggest bulls in the ring were left stunned by the money it mined by the time it closed on Thursday: a mobilization of Rs 2.36 lakh crore, over 15 times the target of Rs 15,500 crore. 

It's a mind-boggling testimony to the amount of money floating around in Indian markets, the hunger for good stocks, and the sheer euphoria about the India story ^ also reflected in the fact that the sensex too closed up 388 points at 20,261 on Thursday. The success of Coal India also sets an impressive benchmark for biggies like SAIL, Hindustan Copper, Manganese Ore and Power Grid which are lined up to tap the capital markets in coming months. 

It can be a little hard to get one's head around all the zeroes in a figure like Rs 2.36 lakh crore (or $53 billion). So here's some perspective. The amount of money that flowed into the offering by the `black diamond' in just four days is more than last year's GDP of about 140 countries. Nearer home, it is more than the GDP of Sri Lanka ($42 billion) and four times that of Nepal ($12.5 billion), according to data on the World Bank's website. It is also almost 10 times India's health budget of Rs 25,154 crore for 2010-11, nearly five times our education budget of Rs 49,904 crore and almost one-fourth the size of the Union budget itself. 

Here's another fascinating comparison: Foreign institutional investors (FIIs) have pumped in a record Rs 1.08 lakh crore into Indian stocks so far this year. For the Coal India IPO alone, they have put in bids worth Rs 1.20 lakh crore. ``This is one of the best PSUs (CIL is the world's largest coal producer and accounts for 80% of India's coal production) and was offered at a very good valuation,'' explained Dharmesh Mehta, MD, institutional equities, Enam Securities. ``The huge oversubscription also reflects the easy liquidity situation abroad,'' he added. With interest rates at extremely low levels in most developed countries, FIIs can easily borrow there and pump in money into attractive stocks in emerging markets, which is exactly what happened in this case. 

The offer also witnessed a rise in the average retail application size to Rs 70,000-75,000 from Rs 40,000-45,000 in other recent offerings. "The strong retail participation in the IPO might actually make the case stronger for Sebi to increase the maximum retail application size to the proposed Rs 2 lakh,'' said Sanjay Sharma, MD & head, equity capital markets, Deutsche Bank, one of the merchant bankers to the offering. 

A panel of ministers headed by finance minister Pranab Mukherjee is expected to meet on Sunday to decide the issue price of the offering in the coal behemoth. While the issue price was in the band of Rs 225-245, the strong demand should allow the government to price it towards the highest point, a banker close to the issue was quoted as saying by news agencies. The market consensus is that the scrip will list at around Rs 300. If it does so, Coal India's market cap will be about Rs 1.89 lakh crore, which would make it India's fifth largest company by market cap, behind only RIL (Rs 3.53 lakh crore), ONGC (Rs 2.90 lakh cr), SBI (Rs 2.03 lakh cr) and TCS (Rs 1.93 lakh cr) based on closing prices on Thursday. 

Demand was strongest from qualified institutional buyers, which includes FIIs, mutual funds and insurance firms, who bid for 24.7 times the shares on offer to them. Initial indications are that retail investors bid 2.4 times the shares allocated to them, with a record of 18 lakh applications, and this figure was expected to rise. Ironically, Coal India employees themselves stayed away from the IPO, with their bids amounting to barely 9% of the shares reserved for them. 

Understandably, the government, which is looking to divest 10% of its 100% stake in the company, was ecstatic at the positive response. Pranab Mukherjee said the huge demand for the IPO showed the level of investor confidence in premier Indian companies, both in the public and private sector. 

"Don't underestimate a government company. These are like hidden treasures," a delighted Coal India chairman Partho Bhattacharya told TOI. ``The size of the IPO is only befitting. Look at it this way: Coal India is the (world's) largest reserve holder and the largest producer. Nobody understood the company. But today everyone is taking it seriously.'' 

Comparisons are being drawn between this IPO and the Reliance Power IPO that closed in January 2008 and was subscribed 73 times. However, the rules of bidding were markedly different then. During the Reliance Power IPO, institutions were allowed to bid with just 10% margin money. So, if an FII had $50 million to put into the offer, it could actually put in a bid for shares worth $500 million. But a few months ago, Sebi scrapped this practice. So, an FII can bid $50 million for Coal India only if it wants shares worth that much. 

Market players also believe with a series of PSUs now lined-up for divestment, the success of this offer would now make the government more confident about these offers. This would also give investors much higher confidence to invest in PSU stocks in general, and the forthcoming divestments in particular, dealers said
.

IPO- coal India

Source : Mint :Mumbai/Kolkata: pramit.b@livemint.comAshwin Ramarathinam contributed to this story




The initial public offer (IPO) of state-owned Coal India Ltd (CIL) received bids for around one-third of its shares after it opened for subscription on Monday.

The sale of 10% of the company's equity is the biggest ever in India and is expected to fetch the government between Rs13,923 crore and Rs15,160 crore.Market participants have been wary about the issue because of fears that liquidity in the secondary market may be affected by the huge cash institutions and individuals are likely to deploy for this issue.

At the upper end of the price band, the issue size is only 9% less than the Rs16,712 crore that has been raised so far in India's primary market this year. On Monday, the bellwether Sensex index fell to a low of 19,870 points in early trade before closing at 20,168.9, a 0.24% rise

."We are getting a good response although it is difficult to say right now how large the subscription would be," said Nandip Vaidya, president, retail broking at the IIFL group. "Retail investors typically come in only at the later stage of the book-building process and we see very healthy appetite among them for this issue."On Monday, the subscription in the qualified institutional buyer (QIB) category was 63% of the allotted quota, while that in the retail investors category was 10%. Overall bids were 34% of shares on offer.The issue of more than 631.6 million shares closes on Wednesday for investors in all categories except retail investors, who get an extra day at a 5% discount.

Ten per cent of the issue is reserved for employees and retail investors can subscribe up to 35% of the balance.Employees haven't been enthusiastic about the issue. Only 87,425 of the 63 million shares, or the 10% reserved quota, have been subscribed so far, data from the National Stock Exchange showed.CILchairman Partha S. Bhattacharyya expects employee subscription to remain muted because of opposition from trade unions.

The management had expected at least half of the over 400,000 employees on the payroll to subscribe to the IPO, but that is unlikely to happen, he said.The CIL issue may prove to be a litmus test for the government's disinvestment programme, especially since past issues such as those of NMDC Ltd and SJVNL Ltd got lukewarm responses from investors owing to pricing concerns.At least three other state-owned firms-the Shipping Corp. of India Ltd, Hindustan Copper Ltd and MOIL Ltd, another mining company, have filed their draft prospectus with the market regulator.CIL's issue is priced at Rs225-245 a share.

This, plus a strong cash flow, rising profitability and a near monopoly position in coal have ensured the firm has received rave reviews from most analysts despite risks of regulatory obstacles and left-wing extremism.A key risk is a government proposal to share 26% of profits with local people that could bring down net earnings.Bhattacharyya, however, ruled out a major impact, saying his firm needed to raise coal prices by only around 5.5-6% to mitigate its effects.

He also pointed out that the proposed introduction of International Financial Reporting Standards (IFRS) from April could shore up CIL's net profit this year by up to Rs3,000 crore.
Coal miners in India have been making financial provisions in their accounts towards in increase in mining costs as the life of a mine advanced, but under the IFRS norms, there is no scope to make such provision and they would be able to report that portion as part of their profits.

Citi, BofA among shortlisted for Coal India IPO

Source:Reuters:Friday, May 7, 2010 12:44 IST


Mumbai: Citigroup, Bank of America Merrill Lynch and Deutsche Bank are among the six banks that have been shortlisted for bookrunning a $2.7 billion state-run Coal India's IPO, four sources with direct knowledge of the situation said.


Others in the list are Morgan Stanley, Kotak Mahindra Capital and Enam Securities, the sources, who are not authorised to speak to the media, told Reuters.