Govt to exercise greenshoe option in Coal India OFS after 346% oversubscription

2 Jun 2023 , 10:30 AM

The government has decided to execute the oversubscription and sell an additional 1.5% interest in the coal giant after receiving an overwhelmingly positive response to Coal India Ltd’s offer for sale (OFS) from institutional investors.

The OFS, which opened for institutional investors Monday, received a staggering 346% of its subscription.

As part of its disinvestment strategy, the government declared on Wednesday that an OFS would be launched in Coal India.

With an option to sell an extra 9.24 crore shares, or 1.5% of the company equity, in the event of an oversubscription, the government offered to sell up to 9.24 crore shares as a base offer, representing 1.50% of the total paid-up equity. 

According to data from the BSE, today the government received bids for 28,76,24,993 shares vs 8,31,96,831 shares on offer for institutional investors.

A little bit more than the floor price of Rs 225, the bids were received at an indicative price of Rs 226.12.

A robust response to the problem was sparked by the government’s OFS discount of 7% and the company’s promising future.

On Friday, the OFS will be accessible to individual investors. 1,84,88,185 shares have been set aside by the government for distribution to ordinary investors.

If the retail category remains oversubscribed, non-institutional investors who put bids may indicate their readiness to carry forward their unused bids to Friday for allocation to them.

The government’s divestiture marks the beginning of the current fiscal year, which began in April.

This is the third time the government has used the OFS method to sell an interest in Coal India.

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