CIL may push back IPO to September

State-run miner Coal India Ltd (CIL) may push back its initial public offering (IPO) to September or October, instead of July-August as planned earlier, due to the ongoing euro zone crisis.

However, a final decision on the IPO timing will be taken after the government formally approves the divestment.

The government is expected to sell 10 per cent of its stake in CIL, which is among the world’s largest coal miners, as part of its disinvestment programme and expects to raise between Rs 12,000-15,000 crore from the public listing.

As the preceding sales this year, including the NMDC follow-on public offering, received tepid response from investors, the CIL listing may well be delayed to counter the slide in markets that has been brought about by the sovereign debt crisis in Europe.

The 30-share sensitive exchange, or Sensex, of the Bombay Stock Exchange today closed at 16,572.03, about 372.60 points down from its previous close.

Although CIL chairman Partha S Bhattacharyya did not confirm the postponement of IPO, he indicated that hitting markets in September-October was a “better possibility”.

“We will take a final call once the government approval is in place, but September or October is a more realistic time-frame,” Bhattacharyya added.

On his part, CIL Director (Finance) A K Sinha said the miner was working on the Draft Red Herring Prospectus for the listing and the book-running lead managers would be appointed shortly.

Analysts indicated that the market sentiment towards the metals and mining sector had dipped, which could have an impact on the valuation of the miner.

“By September, there will be more clarity on the euro zone crisis, and a recovery can be expected. Also, since it is likely in a large offering, FII (foreign institutional investor) inflows will be important. So, waiting for the recovery is not a bad idea,” an analyst said.

Bankers, likely to be involved in the stake sale, said pushing the listing to September-October would ensure that any adverse impact of the holiday season in Europe, beginning in August, was nullified.