State-run Coal India's $3.5 billion dollar initial public offering (IPO), the biggest in the history of Corporate India, was subscribed up to 34 percent on opening day Monday, even as the company cautioned that the quota set for employees might not get filled.
The issue at a price band of Rs.225-Rs.245 a share, received 213,486,275 bids against 631,636,440 shares on offer for sale till 5 p.m., according to data made available by the stock exchanges.
At the higher end of the band, the IPO size will be to the tune of about Rs 15,400 crore, making it the largest IPO in the history of Indian capital markets.
Coal India Chairman and Managing Director Partha S. Bhattacharyya told news conference in Kolkata that the reserved employees quota of one percent of the total IPO of 10 percent would remain mostly under-subscribed.
"Employees' responses have been influenced by the attitude of the trade unions. The trade unions have been dithering. This is a level with which we are not very happy because in this kind of a process the participation of employees is highly desirable," said Bhattacharyya.
Around 400,000 employees of both CIL and its subsidiaries are entitled to subscribe to the offer.
Bhattacharyya said initially the trade unions had opposed the disinvestment but after confirmation from the finance ministry four of the five recognised trade unions in the company gave their nod.
"Now suddenly again (they have) started talking about strikes," he said.
If the employees quota is under-subscribed, the remaining shares would get distributed among the retail, high networth individuals and qualified institutional buyers.
The offer closes Oct 21 for retail and non-institutional bidders, while for large financial institutions it would end a day earlier. The company is set to list on the stock exchanges Nov 4.
Usually, IPOs in India attract majority of the subscriptions on closing day.
Coal India is the world's largest coal miner, producing over 80 percent of India's coal through 471 mines across eight states. It produced 431.26 million tonnes of raw coal in 2009-10.
It also holds the largest extractable coal reserves in the world with over 22 billion tonnes, ahead of rivals state-run China Shenhua Energy and the world's largest private miner Peabody Energy in the United States.
The mega public float, experts believe, is expected to attract foreign investors and lead to a surge in dollar inflows, pushing the Indian rupee further up. It could cause a liquidity crunch for a short while and lead to correction in the secondary market.