Coal India OFS opens for retail investors today; non-retail issue oversubscribed 3.46x at Rs 6,500 cr on Day 1

The Coal India disinvestment bid received an overwhelming response yesterday, as the OFS was oversubscribed 346% by institutional investors. As a result, the government plans to exercise the green shoe option of divesting an additional 1.5% stake today, a portion of which will be open to retail investors. Despite the positive response to the OFS, Coal India share price tanked 4.4% in trade to Rs 230 apiece on Thursday.

Coal India OFS- Day 1 subscription 

9.24 crore shares were offloaded by the government yesterday, for which 28.76 crore bids were received. While the base price for the offer is Rs 225 per share, the indicative price of the offer was Rs 226.12 per share, with institutional buyers bidding Rs 6,500 crore for the equity stake worth around Rs 2,100 crore yesterday. At yesterday’s closing price of Rs 230 on the NSE, the indicative price is at a 1.7% discount.

About the Coal India OFS

The government will offload a 3% equity stake in Coal India, including a green shoe option to further sell an additional 1.5% over the base offer. The size of the OFS is expected to be about Rs 4,200 crore. 9,24,40,924 equity shares, with a face value of Rs 10 per share, representing 1.5% of the equity were divested on 1 June, while the green shoe option of 1.5% is being exercised on 2 June due to oversubscription. Retail investors can bid for their portion on Friday, as around 10% of the Coal India OFS is reserved for retail investors.

The government currently holds a 66.13% stake in the coal mining PSU. A minimum of 25% of the OFS will be reserved for mutual funds. If there is under subscription in the mutual fund portion, the remaining shares will be offered to other non-retail investors.

The Coal India OFS is the first large divestment from the Government of India, who set a disinvestment of Rs 51,000 crore for the fiscal year 2024 which is lower than the previous financial year. Axis Capital, ICICI Securities, JM Financial Institutional Securities, Kotak Securities, SBICAP Securities are the brokers acting on behalf of the Centre.