Mumbai: The Indian government is likely to select six banks next month for the initial public offering (IPO) of state-owned Coal India, the world’s largest coal miner, ahead of a listing in late July or early August, the company’s chairman said on Friday.
The state monopoly, which has led India’s hunt for coal assets overseas, also aims to firm up deals with listed firms, including US miner Peabody Energy, which could give it access to supplies from the US, Australia and Indonesia.
“Our plan is to bring coal on a fast track at lower-than-spot prices. We have been looking for partnerships, and the response has been better than expected,” chairman Partha Bhattacharyya said in an interview.
Coal India, based in Kolkata, produced 431 million tonnes in 2009-10 and accounts for nearly 80% of output in Asia’s third largest economy. Other miners, such as steel makers, may only produce coal for their own use.
Spreading wings: Coal India’s Bhattacharyya says the firm has been looking for partnerships and the response has been better than expected. Pankaj Nangia/Bloomberg
The company’s IPO of a 10% stake is expected to raise roughly $2.7 billion (Rs12,015 crore), depending on the valuation, in what would be the biggest share sale by a state firm this year as India sheds stakes in 60 firms in coming years.
Tenders for bids from banks were likely to be issued on Friday and banks will be chosen on a combination of both price and technical competence, said Bhattacharyya, who started in the industry 33 years ago as a Coal India trainee.
New Delhi will invite pitches from bankers for the issue by 3 May, and Coal India aims to file draft IPO documents by mid-June. It is targeting a listing by end-July or early August.
India raised $2.2 billion in March through an 8.4% divestment in miner NMDC Ltd. Utility SJVN Ltd, Engineers India Ltd and Steel Authority of India Ltd are some other firms where the government will sell stakes.
IPO proceeds will be used to fund social programmes.
Coal India’s net profit for 2009-10 quadrupled to Rs83.12 billion on the back of rising demand.
Coal miners typically trade at 12-15 times earnings, a benchmark that Bhattacharyya said will form the basis for the company’s listing.
By comparison, China Shenhua Energy trades at around 16 times forward earnings.
Power, steel and cement companies are driving demand for coal in India at 10% a year as the economy grows at a pace exceeded only by China.
Coal powers 75% of India’s electricity, but local output lags swelling demand. Imports are expected by the government to grow to 100 million tonnes in 2011-12 from 80 million tonnes now.