In the biggest-ever disinvestment exercise, the government on Friday mopped up Rs 22,557.63 crore from 10% stake sale in Coal India Ltd (CIL), largely aided by domestic financial institutions. The divestment will bring down the government's shareholding to 79.65%.
Of the 631.6 million shares on offer on Friday bids were received for 662.0 million. Insurance firms bought shares worth Rs 11,360.13 crore, with state-run LIC rumoured to have picked up more than one-third of the stake.
Over-subscribed 5%, the share sale received bids worth Rs 24,210 crore. This is the biggest share sale by any private or public sector company, and covers up for more than half of the government's budgeted disinvestment target for 2014-15. It also exceeded the previous record of over Rs 15,000 crore made by CIL itself in 2010, when the government sold 10% in the coal major.
The retail investor portion, however, remained under-subscribed with bids received for only less than half (55.6 million) of the 126.3 million shares on offer. In value terms, they bid for shares worth Rs 1,852.55 crore.
This was the first disinvestment in which shares reserved for retail investors were doubled to 20%. A minimum of 25% of the issue size was reserved for mutual funds and insurance companies.
The general category of investors including FIIs, mutual funds, banks and insurance companies bid for 1.2 times the shares reserved for them. Out of the 50.53 million shares on block for non-retail segment, CIL attracted bids for 60.83 million shares.
The average bid price for CIL shares was higher at Rs 360.11 for the retail category against the floor, or the minimum offer, price of Rs 358. The government went ahead with the CIL offer despite protest threats by labour unions who are against stake sale in the public sector giant. CIL share sale was the second major PSU divestment after the 5% stake sale in SAIL, which attracted Rs 1,700 crore.CIL stock ended 3.8% lower at Rs 360.85 on the BSE in the wake of the floor price for the share sale being set at a discount of 4.5% to Thursday's closing price.