Huge interest from FIIs; retail investors, CIL staffers less enthused.

The much-awaited Initial Public Offer (IPO) of Coal India Ltd (CIL) opened for subscription today and was subscribed 34 per cent (0.34 times) on the first day. And, contrary to the trend seen in most of the recent issues, foreign institutional investors (FIIs) put in huge bids on day one. The portions reserved for retail and high net worth individuals also saw a decent amount of bids.

The portion reserved for institutional investors has been subscribed 63 per cent (0.63 times), with bids received for 178.06 million shares, of which FIIs accounted for 155.54 million shares and domestic institutions, excluding mutual funds, put in bids for 22.45 million shares. Very few issues see such huge bids coming from FIIs on the first day, as the current norms require 100 per cent up-front margin to be paid at the time of bidding.

According to data available on the website of the National Stock Exchange (NSE), the issue received bids for 213.49 million shares till 5 pm on Monday. The IPO comprises 631.64 million shares on offer in the price band of Rs 225 to Rs 245. Further, retail investors and employees will be given a five per cent discount to the issue price.

Meanwhile, the retail segment has been subscribed 10 per cent (0.10 times), while that reserved for high net worth individuals has been subscribed 18 per cent (0.18 times). The employees’ quota received bids for less than 90,000 shares on the first day, as against 63.16 million shares reserved. CIL chairman Partha S Bhattacharyya said — he was addressing a media gathering at Kolkata — that the employee subscription “will definitely fall short”.

For non-institutional investors, the last day for putting in bids is Thursday. Institutional investors can bids only till Wednesday.

Meanwhile, the Union Ministry of Finance expects flow of Rs 50,000 crore funds from foreign financial institutions (FIIs) for the IPO.

“We expect foreign exchange inflow of Rs 50,000 crore for the CIL IPO”, said Siddharth Pradhan, additional secretary, department of disinvestment, ministry of finance.

Pradhan, who was in the US last week for an investors’ meet on CIL IPO and other PSU disinvestment proposals, said, the government is well on its way to achieve the disinvestment target of Rs 40,000 crore during the year.

This will be mainly raised through disinvestment in companies like Indian Oil Corporation (Rs 22,000 crore), Steel Authority of India (Rs 4,000 crore), Power Grid Corporation (Rs 8,000 crore) and ONGC (Rs 10,000 crore).

source: Business Standard

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