 "Coal India, TCI and LIC - a triangular love story")
The Coal India offer for sale (OFS) was completed last week. The government raised Rs 22,557 crore. Retail investors bought 54.14 million shares or 8.2 per cent of the OFS for Rs 1,852 crore. Mutual funds, which are flush with money, showed more disinterest, buying just a third of that quantity. Foreign investors were slightly more kind with reports putting their contribution at around a billion dollars (Rs 5,500-6,000 crore). More granular data are still on their way, but this should be enough for some basic analysis.
Let us see what happened in 2010, when the same firm first hit the Street with roughly the same number of shares. Even at that time, the Sensex was at its all-time high. Retail investors picked up a whopping 222.49 million shares or 35 per cent of the issue. Some 484 foreign institutions bought 209 million shares accounting for a third of the sale. The sale was such a broad-based success that though the company got 1.5 million new investors that day, none of them had a holding of over 1 per cent. 44 insurance companies together accounted for just 5 per cent of the issue. Life Insurance Corporation of India (LIC) probably did not have to bid at all. You are free to make the Manmohan vs Modi comparisons here, but I don't want these to eat into the space for the love story.
The ambitious campaign that spanned across media, court rooms and even diplomatic alleys stunned the establishment. Official reactions made the idiomatic 'deer caught in the headlights' look intelligent. TCI even mounted a full-blown website called www.coal4india.com, documenting various allegations on pricing, coal washing and directors' inaction and the media coverage on it. There was a time when there was no news story on Coal India, without a TCI view on it. But today, TCI is nowhere. In October 2014, the Financial Times reported that the fund had exited its Coal India investments. By December, it also withdrew the cases. TCI's Oscar Veldhuijzen, who would once give copious answers, did not respond to Street Food.
So, let us get back to data. It seems around the time the TCI affair was at its peak, LIC began nibbling on the stock. In March 2013, it overtook TCI and emerged as the largest minority shareholder with a stake of 1.23 per cent. Was the 'largest minority shareholder tag' critical? Did the loss of this title take the sheen off TCI's campaign?
The next quarter, LIC upped the stake to 1.54 per cent, while TCI's went below 1 per cent. Every quarter since, the LIC stake has gone up (see table).
What does this tell us? Did the parents bump off a progressive but tough lover and replace him with a ghar jamai? TCI has gone away. But, what about the issues it raised? LIC has been the largest investor in CIL for nearly two years. Has it raised any valid issues with the management? With more shares in its kitty after the OFS, LIC's responsibility towards contributing to good governance of Coal India is more than ever. Can it stand up and deliver? LIC also did not respond to Street Food.
Let us see what happened in 2010, when the same firm first hit the Street with roughly the same number of shares. Even at that time, the Sensex was at its all-time high. Retail investors picked up a whopping 222.49 million shares or 35 per cent of the issue. Some 484 foreign institutions bought 209 million shares accounting for a third of the sale. The sale was such a broad-based success that though the company got 1.5 million new investors that day, none of them had a holding of over 1 per cent. 44 insurance companies together accounted for just 5 per cent of the issue. Life Insurance Corporation of India (LIC) probably did not have to bid at all. You are free to make the Manmohan vs Modi comparisons here, but I don't want these to eat into the space for the love story.
The ambitious campaign that spanned across media, court rooms and even diplomatic alleys stunned the establishment. Official reactions made the idiomatic 'deer caught in the headlights' look intelligent. TCI even mounted a full-blown website called www.coal4india.com, documenting various allegations on pricing, coal washing and directors' inaction and the media coverage on it. There was a time when there was no news story on Coal India, without a TCI view on it. But today, TCI is nowhere. In October 2014, the Financial Times reported that the fund had exited its Coal India investments. By December, it also withdrew the cases. TCI's Oscar Veldhuijzen, who would once give copious answers, did not respond to Street Food.
So, let us get back to data. It seems around the time the TCI affair was at its peak, LIC began nibbling on the stock. In March 2013, it overtook TCI and emerged as the largest minority shareholder with a stake of 1.23 per cent. Was the 'largest minority shareholder tag' critical? Did the loss of this title take the sheen off TCI's campaign?
The next quarter, LIC upped the stake to 1.54 per cent, while TCI's went below 1 per cent. Every quarter since, the LIC stake has gone up (see table).
What does this tell us? Did the parents bump off a progressive but tough lover and replace him with a ghar jamai? TCI has gone away. But, what about the issues it raised? LIC has been the largest investor in CIL for nearly two years. Has it raised any valid issues with the management? With more shares in its kitty after the OFS, LIC's responsibility towards contributing to good governance of Coal India is more than ever. Can it stand up and deliver? LIC also did not respond to Street Food.