Centre may appoint six merchant bankers for CIL's IPO

The disinvestment plan of navratna coal firm Coal India Limited (CIL), which will enable the Centre to raise around Rs 12,000 crore, seems to be on the fast track.

Request for proposals have already been invited from Category-I merchant bankers registered with the Securities and Exchange Board of India (Sebi) to act as book running lead managers (BRLMs) on CIL's initial public offer (IPO) which is slated for August this year.

The Centre will select and appoint up to six merchant bankers with requisite experience in public offerings and together these bankers will form a team of BRLMs.

The BRLMs, in consultation with the Government, will form a syndicate as required under the Sebi guidelines.

These merchant bankers will also assist and advise the government on CIL's disinvestment process.

The coal PSU has set a target for filing the Draft Red Herring Prospectus (DRHP) with the Sebi by June 15.

“We will have a series of meetings with the Sebi on our IPO which is scheduled for August this year”, a senior CIL official told Business Standard.

The Centre is planning to offload 10 per cent stake in CIL's paid-up equity share capital which stands at Rs 6,316 crore. One per cent of the offer, which will be through the 100 per cent book building process, will be reserved for the four lakh odd employees of CIL and its eight subsidiaries. Besides advising the government on the timing and modalities of the IPO, the BRLMs will structure the IPO in conformity with the prevailing framework an guidelines of Sebi and the stock exchanges, Securities Contracts and Regulations Act, 1957 and Companies Act of 1956.

The BRLMs will also undertake due diligence activities, prepare the DRHP and undertake filing of the DRHP with the Sebi as well conduct pre-market surveys, road shows and generate interest among the prospective investors.