Wednesday, October 13, 2010

Coal India offer price fixed at Rs.225-245

Kolkata : The Central Government on Tuesday fixed the price band of Coal India\'s (CIL) initial public offering (IPO) at Rs.225-245 a share. The decision was taken by a ministerial panel headed by Finance Minister Pranab Mukherjee.

"Coal India IPO price band has been fixed at Rs.225-245 a share. We expect to raise over Rs.15,000 crore from the issue," Coal Minister Sriprakash Jaiswal told reporters after the meeting of an Empowered Group of Ministers (EGoM) in New Delhi.

Officials connected with the IPO told The Hindu that the issue was set to be launched in Mumbai on Wednesday when road shows would be held.

Brokerages welcomed what is now set to be India\'s biggest share-sale which will generate around Rs.15,515 crore at the higher band. They saw it as very fairly priced issue which would bring long-term gains to the investors. Top brokers told The Hindu that the stock was of very high quality and should be in one\'s portfolio. "It is a unique asset to hold," they said.

The government is seeking to divest 10 per cent of its equity in the navratna company through the sale of 63.33 crore shares of which one per cent has been reserved for employees who would get the shares at a five per cent discounted price. This facility would also be available for retail investors. The minimum bid has been pegged at 100 with further bids being available in multiples of 10.

In another significant development, the trade unions, which were earlier planning to greet the issue on its opening date on October 18 with a week-long strike, are all set to withdraw their programme with two of the major trade unions — the Centre for Indian Trade Unions and the All India Trade Union Congress — withdrawing their support to the strike. The Indian National Trade Union Congress had already maintained a distance from the opposition.

Motilal Oswal of Motilal Oswal Financial Services told The Hindu that the issue was sure to generate substantial interest, especially that of foreign institutional investors. "Investors should be happy .. it is very fairly priced," said Amit Rathi of Anand Rathi Financial Services. Sources connected with the IPO said that several top overseas investors had shown great interest in the issue in the just concluded road shows in the U.S., England, Australia and Singapore.
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