A big-bang initial public offer (IPO) of shares by Coal India Ltd closed on Thursday with a thumping collection of Rs 236,148 crore, 15.2 times the targeted amount, but it fell short of a record set by Reliance Power Ltd set in January 2008.
Reliance Power’s collections had totalled Rs 254,472 crore CIL will get to keep only Rs 15,745 crore of the money offered, while the rest will be returned. Foreign institutional investors have bet big on the issue and the refund is expected by some market experts to be put in other shares in the market.
Both institutional and retail investors jumped in to take advantage of the issue, betting on what many said was an attractive price and vast coal reserves underlying the company, which is the world’s largest coal mining firm. The exact price is yet to fixed, but the upper limit of the band is Rs 245 per share. The shares will list in November.
“Institutional participation was on expected lines but retail participation is encouraging for this size of issue,” said Sanjay Sharma, head of equities at Deutsche Bank’s Indian unit, one of the lead managers of the issue.
“Every issue has its challenge but a great issue at a great price makes it easier to sell,” said S. Subramanian, managing director of Enam Investment Banking, another lead manager.
The qualified institutional buyers (QIB) portion of the issue that closed for subscription on Wednesday was subscribed 24.7 times and sources close to the issue said the retail portion got subscribed over 2 times and the non-institutional subscription was covered 24 times. The official, final break-up was expected later at night.
IPO experts said the issue showed market strength. “It shows that if the issue is good and priced well retail investors will invest into the issue and they came to invest beginning the first day of the issue,” said Prithvi Haldea, MD, Prime Database, which tracks IPOs.
Rs 15,475 crore
Amount Coal India plans to raise at upper end of price band of between Rs 225 and Rs 245
Rs 236,148 crore
Amount collected by the IPO in offers made over four days — 15.2 times the targeted amount.