Coal India Ltd to debut Initial Public Offer on October 18, 2010


Coal India Ltd, a Public Sector Undertaking, is to debut its Initial Public Offering on Monday, the October 18, 2010 . Coal India Ltd. , one of India's National Assets is the largest producer of coal in the world. The Government is divesting 10 percent or Rs 15000 crores worth shares to the Indian Public. The objective of the divestment is also for "spreading the equity cult in the country".

Coal India Ltd, a Public Sector Undertaking, is to debut its Initial Public Offering on Monday, the October 18, 2010 . Coal India Ltd. , one of India's National Assets is the largest producer of coal in the world. The Government is divesting 10 percent or Rs 15000 crores worth shares to the Indian Public. The objective of the divestment is also for "spreading the equity cult in the country". Out of the issue a part is set aside for retail investors and the remaining for high net worth individuals, Mutual Funds and Foreign Institutional Investors. Applications varying from Rs 5000 to Rs 1 lakh come under the purview of retail investors. The pricing of shares by the Government is attractive and comparable to already listed shares of other companies with scope for appreciation, with low risk for the common investors. Retail subscribers are also given 5 % discount to the issue price. In addition to the competitive pricing since the aim of the government is to spread the equity culture in the country and to benefit from the growth prospects of national assets, retail investors should capitalize this opportunity. Coal India Ltd is likely to be oversubscribed and as full allotment to retail investors is not foreseen, application to the extent possible according to one s financial capacity would give a handsome return.

Coal India Ltd. Offer to sell shares valued at Rs 151.5 billions is the nation's biggest initial share sale to investors. It is reported by Bloomberg News that of the fifteen of 18 investors surveyed by it said they plan to bid for shares in the world's largest coal producer. The book building form through which the share would be offered to the investors will have a price band of Rs 225 to Rs 245 a share. The issue opens on October 18, 2010 and closes on October 21, 2010. The issue proceeds is likely to narrow down the budget deficit of the Government. Opinions expressed by certain equity firms is given below :

"Apply to buy as much as you can," said Manish Sonthalia, who manages $230 million in equities at Motilal Oswal Securities Ltd. in Mumbai, who's advising investors to bid at the top end of the range. The stock could gain 34 percent in the first year, said Sonthalia.

"The shares are available at a price cheaper than their global peers," said Deven Choksey, chief executive officer at K.R. Choksey Shares & Securities Pvt., manager of the equivalent of $124 million in assets. "They have large cash holdings on their balance sheet and the world's largest coal reserves. They haven't charged a premium for this."

Gurgaon, India-based " MakeMyTrip Ltd." has posted the biggest rally for any IPO on New York exchanges in 2010, according to data compiled by Bloomberg. The shares of the company have more than doubled since it became the first Indian company to complete a U.S. initial offering since 2006.

The Managers to the Issue of Coal India Ltd are Citigroup Inc., Deutsche Bank AG, Bank of America Corp., Enam Securities Pvt., Kotak Mahindra Capital Co. and Morgan Stanley.


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