Centre plans to divest three to four per cent in state-run miner Coal India via an offer-for-sale route in a sale worth Rs 100 billion (Rs 100 bn), CNBC-TV18 reported on Thursday. The report added the government planned to price the offer at an attractive discount to prevailing market levels to encourage institutional participation. The proposed divestment would form part of ongoing efforts to monetise public assets. Officials were monitoring pricing and timing to balance government receipts and market stability.

Coal India said it had not received any communication from the government regarding any potential OFS, and a response from the Department of Investment and Public Asset Management was awaited. At the end of the March quarter the government held 63.1 per cent in Coal India, while mutual funds held 9.5 per cent and Life Insurance Corporation of India had about 11.05 per cent as one of the largest institutional shareholders.

Foreign portfolio investors accounted for 8.38 per cent, with retail investors numbering 2.53 million (mn) and holding about 3.82 per cent of the company. The retail category referred to those with authorised share capital of up to Rs 0.2 million (Rs 0.2 mn). The shareholding mix indicated diverse institutional and retail participation ahead of any sale and could influence demand dynamics for the offer.

Shares of Coal India traded two per cent lower after the media report at Rs 460.1 before closing at Rs 466.40, and the stock has risen 22 per cent over the past 12 months. Market participants would watch pricing, demand and allotment to different investor categories if the government proceeded. Analysts suggested that subscription levels from domestic institutions would shape allotment and final pricing.