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Divestment: Govt plans to raise Rs 145 billion by offloading 9% stake in CIL

Coal India Limited (CIL) is also planning to offer retail investors a five per cent discount over the floor price of Rs 266 per share

New Delhi: State-owned Maharatna company, Coal India Limited (CIL), is going to offload 9 percent of the government’s shares to institutional and non-institutional buyers and the proceeds of the sale are expected to help the government raise Rs 145 billion, sources have said.

What’s on offer?

The coal ministry, on behalf of the President of India, the largest shareholder in CIL, has offered three per cent stake to institutional and non-retail shareholders on October 31 and plans to offer the remaining shares to retail investors on November 1. The public sector undertaking has also planned to keep the option of selling an additional six per cent shares open.

‘Shares may get oversubscribed’

According to sources, CIL is also planning to offer retail investors a five per cent discount over the floor price of Rs 266 per share. The state-owned company is also gearing itself for a situation where shares may get oversubscribed, which, sources said, is quite likely as the discount offered to retail investors is bound to generate more interest. In case the oversubscription option is exercised, the government’s shareholding will fall to 69.32 per cent while a three per cent offloading will bring down its shareholding to 75.32 per cent. Currently, the government owns 78.32 per cent in this company. Oversubscription is a situation where investors order for more shares than offered by the company. This may affect the price when the equity is actually issued. On Wednesday, when the markets opened, CIL shares were trading at Rs 267.15 a piece. The floor price being offered by CIL is lower than the current trading price.