India launched its largest-ever share sale on Oct. 18, with the government looking to raise $3.5 billion by offering 10% of state-owned giant Coal India -- the world's biggest coal miner. The offering invites foreign and retail investors into the global resource behemoth, which produces 80% of India's coal through 471 mines in eight states.
In the first two hours, bids were received for more than five million of the total 631.6 million shares on offer, official data at the Bombay Stock Exchange showed. The price was set at between 225 and 245 rupees (US$5 to $5.50 a share.)
Coal India holds the largest extractable coal reserves in the world with over 22 billion tons, ahead of rivals China Shenhua Energy and the world's largest private miner, Peabody Energy in the United States.
Coal currently accounts for more than half of India's energy use and consumption is set to increase as economic development accelerates in energy-intensive sectors such as steel and cement manufacturing.
Coal India's divestment is part of New Delhi's plan to raise a record $ 8.5 billion by March next year from state sector sales, with the proceeds to be used for social programs and reducing the budget deficit.
The state-run company posted a net profit of 96 billion rupees (US$2.1 billion) for the year to March on revenue of 525 billion rupees.
Profits could rise by a quarter and revenues by 14% in the fiscal year to March 2011, its finance director A.K. Sinha said ahead of the IPO.
India's largest IPO so far was the $2.46 billion raised by billionaire Anil Ambani's Reliance Power in January 2008, according to the Prime Database. Indian companies have raised over $11 billion so far this year through domestic issues, fast closing in on the 2007 record of 529 billion rupees, Indian brokerage firm Motilal Oswal said recently.
Other state-run firms like Manganese Ore, Power Grid, Hindustan Copper and Steel Authority of India have plans for share sales by the year-end.
Copyright Agence France-Presse, 2010