The public sector Coal India Ltd (CIL), which is in the initial public offer (IPO) mode now, will kick-off its search for anchor investors with road shows in Singapore, Australia and Hong Kong in the first leg of the programme beginning early September.
The fortnight-long trip which will end with presentations made before prospective investors in Los Angeles, will take the team of officials through Sydney, Hong Kong, London, New York and Boston.
The road shows will include one-to-one meetings with prospective investors identified by its six investment bankers. The book running lead managers (BRLMs) for the CIL issue include Citi Group Global market, Detsche Equities, DSP Merrill Lynch, Kotak Mahindra Capital, Enam Securities and Morgan Stanley. The team of officials include a Joint Secretary (Department of Divestment) Additional Secretary Coal Ministry, and a team of three CIL officials led by the chairman and including the finance director.
Initial reports by research analysts have revealed a substantial appetite for the IPO, under which 63.3 crore share would be offered as the government gives up 10 per cent of its Rs.6,330 crore share capital held in the company, which the draft offer document describes as the world's largest coal producer. The document is now awaiting SEBI nod. The fact that besides being the largest producer, CIL meets 42 per cent of India's energy needs supplying coal at about 50 per cent of the world price without any subsidisation of the product by the country's tax payers seem to have excited prospective investors, it was learnt.
The anchor investor concept, which received the SEBI nod last year, envisages a scenario where a part of the issue which targets this segment of large investors is opened before the issue's formal launch. The price quoted then become a sort of benchmark. An anchor investor has to bid for upwards of Rs.10 crore worth of shares, (in case of overseas investors $ 100 million) with this segment being allowed to bid for 30 per cent of the portion reserved for qualified investor bodies which can take up to 50 per cent.
The SEBI, while announcing the concept in 2009 said that the move, to bring in anchor investors through the book building route, aimed to help BRLMs to market issues in an uncertain market.