Govt to sell 3% stake in Coal India via offer for sale route, floor price set at Rs 266 per share

The government will sell up to 3% stake (18.62 crore shares) in Coal India on October 31 and November 1 via Offer for Sale (OFS) route at a floor price of Rs 266 per share. The floor price is at discount of 4% to today's closing price of Rs 277 on the NSE.

Non-retail investors will be allowed to take part in the OFS on October 31. On November 1, both retail and non-retail investors can take part in the share sale.

In case of oversubscription, an option of selling additional 37.24 crore (nearly 6% stake) shares will be available.

The offer will be carried out from 9:15 am to 3:30 pm on both days on separate windows of BSE and NSE.

Retail investors may be allocated shares at a discount to the floor price.

20% of the offer size shall be available to retail investors. No single bidder other than mutual funds and insurance companies shall be allocated more than 25% of the offer shares.

The government holds 78.32% stake in Coal India. LIC is the biggest public shareholder with 8.97% stake in the state run coal behemoth.

Earlier, the government sold 10 per cent stake in Coal India through an OFS in January 2015. It had raised about Rs 23,000 crore from the sale. The Coal India stock closed at Rs 277, down 3.62 per cent on the NSE. On BSE, the stock closed 3.88% or 11.15 points lower at 275.90 level.

The stock has lost 4.50% during the last one year and gained 4.90% since the beginning of this year.

22 of 28 brokerages rate the stock "buy" or 'outperform', five "hold" and one "underperform" , according to analysts' recommendations tracked by Reuters.

An offer for sale helps promoters of listed companies dilute stake through an exchange platform. The promoters are the sellers. The bidders can include market participants such as individuals, companies, qualified institutional buyers and foreign institutional investors.

The facility is available on the Bombay Stock Exchange and the National Stock Exchange (NSE). Only top 200 companies by market capitalisation in any of the four completed quarters can use the facility.