Disinvestment: Govt to offload stake in Coal India through Offer for Sale (OFS)

New Delhi: The government is going to offload up to 3 percent stake in Coal India Limited via an offer-for-sale (OFS), said the Maharatna PSU in a regulatory filing on Wednesday. An Offer-for-Sale is a way for promoters of a company to sell their shares in order to raise funds, which in this case is the Central government. This will be the first disinvestment transaction of the current financial year. In the Union Budget 2023-24, a disinvestment target of Rs 51,000 crore has been set.

Govt plans to offer up to 3% shares

Further, the filing said that the Seller (government) plans to offer up to 9,24,40,924 equity shares of face value Rs 10 each, representing 1.50 percent of the total paid-up equity share capital of the Company. Furthermore, there is an Oversubscription Option available, allowing the Seller to additionally sell 9,24,40,924 (1.50 percent) equity shares of the Company. If the Oversubscription Option is exercised, the total equity shares offered will amount to 18,48,81,848 (3 percent) of the Company's equity. In the event that the Oversubscription Option is not exercised, the equity shares forming part of the Base Offer Size will be the sole Offer Shares.

Up to 5% of the Offer size may be allocated to eligible & willing employees of CIL

The filing also noted that up to five percent of the Offer size may be allocated to eligible and willing employees of Coal India Limited after the completion of the Offer, subject to approval from competent authorities and in accordance with applicable laws. Eligible employees will have the opportunity to apply for equity shares, with a maximum limit of 5,00,000 shares per employee. The allotment per employee will not exceed 2,00,000 shares, and in the case of undersubscription in the employee portion, the total allotment to an employee shall not exceed 5,00,000 shares.

Floor price set at Rs 225

Further, the filing also highlighted that the upcoming Offer for Sale (OFS) of Coal India Limited's equity shares will follow a price priority basis for allocation, with a floor price of Rs 225. The allocation process, as per the SEBI OFS Circular, will prioritise price-based allocation for bidders, except for Retail Investors who will have the option to bid at or above the Cut-Off Price.

Allotment process

Retail Investors, defined as individual investors placing bids for shares valued at not more than Rs 2,00,000, will be allocated 10 percent of the Offer Shares if valid bids are received. The Stock Exchanges will determine the eligible quantity for the Retail Category based on the declared Floor Price by the Seller. Any remaining unsubscribed shares in the Retail Category will be available for allocation to Non-Retail Investors who choose to carry forward their bids, said the filing.

No single bidder, excluding Mutual Funds and Insurance Companies, will be allocated more than 25 percent of the Offer Shares. Retail Investors can either enter a price bid or opt for the "Cut-Off Price", which is the lowest price determined in the Non-Retail Category. If the Retail Category is fully subscribed, bids below the Cut-Off Price or Floor Price will be rejected.

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