CIL files draft prospectus; IPO likely in mid-October

State-owned Coal India Ltd yesterday filed a draft offer document for selling 10 per cent of its the equity, paving the way for the divestment of a portion of the 100 per cent government holding in the company, which has been described as the world's largest coal producer. CIL produces over 80 per cent of the country's coal requirements.

The 375-page draft red herring prospectus (DRHP) for the initial public offer was filed with the Securities and Exchange Board of India. With an offer of 630 crore shares constituting 10 per cent of the Rs6,316.36 crore share capital of the behemoth, the IPO is considered the government's largest divestment exercise.

CIL is keen to launch the issue in the second half of October, 2010.

The IPO, which is tipped to be the second largest in the Indian capital market after Reliance Power's Rs13,662 crore offer in January 2008, comes at a time when the benchmark Sensex is up 4.7 per cent year-to-date and has risen 14.6 per cent over the past two months or so.

Earlier, bankers involved in the transaction said the plan was to open the issue on 18 October and close it three days later. The largest government share sale so far was the Rs9,930 crore follow-on offer in NMDC Ltd earlier in March.

The department of disinvestment in early May mandated six investment banks - Deutsche Bank AG, Morgan Stanley, Citigroup Inc, Enam Securities Pvt Ltd, Bank of America Merrill Lynch and Kotak Mahindra Capital Co - to manage the share sale.