Despite Coal India Ltd (CIL) offer for sale being oversubscribed, the central government decided not to offload the entire shares it has earlier proposed to, thereby raising only a third of Rs 14,500 crore that it has earlier planned to raise through 9% stake dilution.

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The government only offered a total of 19.8 crore or 3.19% equity shares for sale, which fetched around Rs 5,300 crore. It exercised greenshoe option to the extent of 0.19%, or 1.17 crore shares out of 37.24 crore shares proposed.

According to a company official, it was unexpected to see the government did not exercise the entire greenshoe option but the tepid demand from institutional investors on Day One may be the reason why the government decided against offloading the entire stake through greenshoe option.

On the second day of the share sale, the retail portion was subscribed 1.56 times, which saw bids for 6.19 crore shares against a total issue size of 3.96 crore shares, as per data available on the National Stock Exchange.

The two-day offer for sale ended on Thursday, with the second day reserved for retail investors. Coal India’s share price closed 1.9% lower over the previous close at Rs 261.1 apiece on BSE, lower than the floor price of Rs 266 fixed by the government for the offer share.

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However, the shares closed well above the discounted price of Rs 253, at which the offer shares were available to retail investors. In a disclosure on NSE on Wednesday, the coal ministry said that it will exercise the oversubscription option to the extent of 1.17 crore, or 0.19%, equity shares of the company in addition to 18.62 crore, or 3%, shares forming part of the base offer size. 

Source: DNA Money Correspondent