The first phase of Coal India?s road shows, ahead of the company?s proposed offer for sale (OFS), received positive feedback from fund managers and institutional investors, said company sources. The road shows are intended to generate interest in a 5% stake sale in the world’s largest coal mining company, though a timeline for the issue is yet to be finalised.
Top company officials, including chairman S Narsing Rao, Department of Disinvestment (DoD) officials and investment bankers met several institutional investors to clear apprehensions over falling coal production, project bottlenecks and environmental clearances, rail infrastructure, fuel supply agreement (FSA) and the new mining Bill, among several other issues, said sources.
?The response is encouraging,? said a top company official, adding that some of the fund managers and institutional investors have earmarked funds for CIL?s disinvestment. In the first phase, road shows were conducted in New York, Boston, Kansas City, San Francisco, London, Edinburgh and Amsterdam from October 21 to 31.
Some of the notable institutional investors the company met with included JPMorgan, Investec, Anderson Strathern Asset Management, Baillie Gifford and First State Stewart. ?Investors expressed concern due to overhang of disinvestment and its impact on stock price since the announcement was first made in February this year. We addressed all possible queries and tried to build their confidence,? the official said, requesting anonymity.
CIL will begin the second phase of road shows ? the Asian leg ? on November 18, during which the company and DoD officials, along with bankers, will meet investors in Hong Kong, Singapore and Sydney.
Against the earlier proposal of 10% disinvestment that attracted stiff opposition from the workers union, the government now intends to offload 5% equity in the company via OFS. As per stock exchange data, the government holds 90% stake in the state-owned coal mining company. CIL was listed in 2010 when the government sold 10% stake and raised R15,200-odd crore via an initial public offer.
On Wednesday, the CIL share ended 0.83% higher at R298.75. The stock is trading at a discount of 22.7% to its 52-week high of R374.05 seen in December 2012. The stock has underperformed benchmark indices since the start of CY13. Bloomberg data show the stock has given ytd returns of -16% compared to the 7.5% return on the 30-share Sensex.