Five banks hired to manage Coal India stake sale

The stake sale is valued at about $3.2 billion at the current stock price

Five Indian investment banks including ICICI Securities and SBI Capital have been hired to manage the government's sale of a 10% stake in state-controlled Coal India, IFR reported on Thursday, citing two sources close to the matter.

The stake sale, valued at about $3.2 billion at the current stock price, is part of New Delhi's aim to raise 695 billion rupees ($11 billion) by March from selling minority stakes in government-owned companies.

Other banks which have been hired to manage the offering are Axis Capital, JM Financial and Kotak Investment Banking, IFR, a Thomson Reuters publication, said. Eight banks including HSBC had submitted bids for the deal.

The deadline for submitting bids was extended several times as global investment banks came under pressure from environmental groups to steer clear of the process, sources told Reuters last month.
 

 

Many foreign banks operating in India are also under pressure to be more selective when it comes to roles that are heavy on staff but light on returns. Most government equity deals pay a fee of just 1 rupee ($0.015), with banks them taking on in the hope of winning more lucrative state business.

Indian investment banks take part in all large equity sales, but Wall Street banks, with their vast offshore networks, are often viewed as crucial for successfully raising large amounts of capital, particularly abroad.

If Coal India's latest share offering is completed, it would be a rare case of a share transaction of this size being managed by Indian investment banks only, banking sources said.

India's cabinet last week cleared the stake divestment in Coal India, the world's largest coal miner in which New Delhi owns 79.65% stake, but the timing of the deal has not been announced yet.

The Department of Disinvestment, which oversees stake sales in state-owned companies, and all the five investment banks did not immediately respond to Reuters request for comment on the hiring.