Govt fixes Coal India IPO price band at Rs 225-245/share

The government today fixed the price band of Coal India's (CIL) initial public offer (IPO), billed as country's largest, at Rs 225 to Rs 245 a share -- a range which could help it raise over Rs 15,000 crore if the next week's public offer is subscribed fully.

The decision was taken by a ministerial panel, headed by Finance Minister Pranab Mukherjee.

"Coal India IPO price band has been fixed at Rs 225-245 a share. We expect to raise over Rs 15,000 crore from the issue," Coal Minister Sriprakash Jaiswal told reporters after the meeting of an Empowered Group of Ministers (EGoM).

The government is diluting 10 per cent stake in CIL through the public offer. At present, the government owns a 100 per cent stake in the company.

The coal behemoth will offer 631,636,440 shares with a face value of Rs 10 each and will offer 5 per cent discount to retail investors and it's employees over the issue price.

"There is a 5 per cent discount in the IPO for retail investors and 5 per cent for our employees," Jaiswal said.

Sources said the EGoM fixed the price band at Rs 225-245 a share to garner maximum from the four-day IPO, billed as the biggest ever to hit the Indian capital market on October 18.

The four-member EGoM includes Home Minister P Chidambaram, Coal Minister Sriprakash Jaiswal and Planning Commission Secretary Sudha Pillai.

Among other factors, EGoM considered the share prices of major global coal companies including China Shenhua Energy Company, the world's most valuable coal producer, to arrive at a figure, sources added.

Citigroup Global Markets India, Deutsche Equities (India) Private, DSP Merrill Lynch, Enam Securities, Kotak Mahindra Capital and Morgan Stanley are the book-running lead managers.

CIL filed the prospectus (Red Herring Prospectus) for the issue with Sebi, after being cleared by the Registrar of Companies, in the last week of September. Its board cleared the revised papers incorporating 78 changes suggested by the market regulator.

CIL is the world's largest coal producer and accounts for over 80 per cent of the domestic production. In 2009-10, the country produced about 532 million tonnes of coal and CIL's contribution was 431 MT.

With over 63 billion tonnes of coal reserves under its fold, CIL is targeting an output of 461.5 million tonnes in the current financial year.

The biggest IPO in India till date is that of Anil Ambani Group company Reliance Power. In January, 2008, it raised Rs 11,500 crore.