The government on Thursday set the floor price for the Coal India (CIL) stake sale at R358 per share — a discount of 4.5% to Thursday’s closing price of R375.15 — making it the biggest equity offering ever in India’s equity capital markets. The 10% stake sale scheduled for Friday will help the Centre raise at least R22,390 crore, taking into account the 5% discount and the 20% quota of shares reserved for retail investors.
The success of the auction of CIL share will mean the government will raise nearly 40% of the R58,425 crore targeted for this fiscal. In addition, the Centre has lined up Indian Oil (R8,200 crore), NMDC (R5,600 crore), BHEL (R3,400 crore), PFC (R1,900 crore), REC (R1,700 crore), and Nalco (R1,200 crore), among others.
The stake sale programme got a further boost on Wednesday after oil minister Dharmendra Pradhan affirmed the government’s commitment to sell a stake in ONGC this fiscal.
The plan was likely to be scrapped following “poor” feedback from foreign investors during the international roadshows.
Given the intent to raise Rs 15,000 crore from the ONGC share sale, the government may raise an estimated Rs 62,000-63,000 crore at current market rates, including CIL. The government has set a target to raise a total Rs 58,425 crore, of which Rs 43,425 crore is planned through PSU stake sale and the balance from selling residual stakes owned by a government agency in erstwhile PSUs.
Finance minister Arun Jaitley recently indicated that the government has lined up an aggressive disinvestment programme to meet the fiscal deficit target of 4.1% in the current fiscal. “We still have close to three months left… This is going to be a period of great activity as far as disinvestment is concerned. I am not going to give any indication but major disinvestment in the coming months prior to March 31 are going to take place,” Jaitley said in a TV interview.
In the 10 months of FY15, the government has managed to raise Rs 1,719.54 crore from the 5.82% auction of Steel Authority of India (SAIL), which was bailed-out by Life Insurance Corporation of India.
The Centre was heavily dependent on CIL and ONGC to meet its target. Even last year, the government had proposed to sell a 10% stake in the state-owned coal mining company but attracted stiff opposition from trade union, forcing the government to postpone the deal. Instead, the government collected Rs 18,317 crore in special dividend from CIL last fiscal to boost its coffers.