The Centre will dilute 5 per cent of its stake in Coal India on Friday and offer up to 5 per cent additionally under a ‘greenshoe option’. The Government proposes to sell over 31.58 crore shares in the PSU with an option to sell an equal number of additional shares.
Based on Wednesday’s closing price of ₹384 on the BSE, the Centre can get over ₹24,000 crore (including the greenshoe option) through a stake dilution.
For the first time, there will be 20 per cent reservation for retail investors. The disinvestment will be done via an offer-for-sale (OFS) through the stock exchange; this mechanism is also known as the auction method.
Meanwhile, market regulator SEBI and stock exchanges have put their surveillance systems on ‘high alert’ to thwart any manipulative activities in the market in view of the proposed OFS by Coal India.
The floor price of the sell-off will be announced by 5 pm on Thursday. This is the price at or over which any investor can bid.
Based on the bids, two cut-off prices will be determined, one for retail and one for institutional investors. Bids below the cut-off prices will not be allotted any shares.
If bids at or above the cut-off price involve more shares than offered, then allotment will be made on a proportionate basis.