Government hurries Rs 40,000-crore stake sale in Coal India, ONGC

MUMBAI : Narendra Modi led NDA Government is hurrying to mop up around Rs 40,000 crore through disinvestment of minority stakes in Coal India and ONGC before global investors go on year-end holidays.

Both state run behemoths have started road shows leading to a possible sell down within three weeks, at a slight discount to prevailing stock price, people directly involved with the matter said.

Coal India's 10% share sale is likely to hit the markets by end this month, making government richer by Rs 22,250 crore. ONGC's 5% stake sale in early December may put about Rs 17,000 crore in government coffers. ONGC share sale may be slightly bigger depending on the investor response, sources added.

Coal India senior management are learnt to be headed for Singapore to sell the issue to the global investors while ONGC management is already in London and US to conduct simultaneous road shows, while Coal India senior management kicked off investor meets beginning last week.

Citigroup, HSBC Securities, ICICI Securities, UBS Securities and Kotak Mahindra Capital are advising ONGC, while Goldman Sachs, Credit Suisse, Bank of America Merrill Lynch and Deutsche Bank are advising Coal India in the share sale.

Timings for the stake sale offer cannot be better when the Indian markets are at its peak and the government wants to encash on it not only to meet its fiscal deficit target but beat by capping it at less than 4.1% of the GDP by March 2015. "Our management is in US and London for the road shows and following response of the investors' appetite, the Department of Divestment will take a final call on the pricing and timing of the issue," a senior ONGC official said.

Coal India listed in 2010 with record IPO and the follow on public offer will reduce government's stake in the company to 80% while after 5% divestment in ONGC, the government will continue to hold about 64%. Funds raised from just these two issues will account for two-third of Rs 60,000 crore of internal divestment target set by the Modi government

ONGC shares closed down 1.5% at Rs 390.7 in a flat Mumbai market on Tuesday valuing the company at Rs 3,34,263 crore while Coal India shares closed marginally down at Rs 352.15 valuing the company at Rs 2,22,430 crore.

Interestingly, Coal India's share sale is happening at a point of time when it's without any chairman and the regulatory issues affecting India's coal sector after Indian apex court cancelled 214 coal mines and likely to put them for auction by March 2015.Coal India could not be reached for immediate comments.