Indian government to offload Coal India stake for $3.2bn

The sale is part of the country’s plan to raise more than $10bn through divestments to fund new infrastructure projects.

In an effort to collect the funding it needs to spur infrastructure development, the Indian government is looking to sell 10 percent of Kolkata-based Coal India, the world’s largest coal producer.

The transaction could value the stake at about INR211 billion (€3 billion; $3.2 billion). The government holds 79.65 percent of Coal India.

The sale is part of the Modi administration’s plan to raise more than INR695 billion by March through the sale of minority stakes in state-owned firms.

The government has raised INR127 billion by offloading holdings in four companies, or less than 20 percent of its target, so far this year. These comprise the Indian Oil Corporation, Dredging Corporation of India, Power Finance Corporation, and Rural Electrification Corporation.

The timing of the latest Coal India sale will be decided by the finance ministry, according to Piysh Goyal, India’s Coal and Power Minister. The likes of HSBC, India’s ICICI Securities and SBI Capital have reportedly submitted bids to manage the divestment.

Other investment banks who have submitted bids for the offering include Axis Capital, Elara Capital, Edelweiss, Kotak Investment Banking, and JM Financial. Five banks will be hired to manage the share sale, which is hosted by the Department of Disinvestment, according to reports.

Another 10 percent stake sale of Coal India was held in January this year with a total of 18 banks bidding for the bookrunner’s role.

Global lenders such as Bank of America Merrill Lynch, Credit Suisse Group, Deutsche Bank, Goldman Sachs, Citigroup and Morgan Stanley worked on previous Coal India share sales. In this round, however, HSBC is the only foreign bank to join the bid.