Mumbai: The government is likely to select six banks next month for the 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 initial public offering of a 10% stake is expected to raise roughly $2.7 billion, depending on the valuation, in what would be the biggest share sale by a state company this year as India sheds stakes in 60 firms in coming years.
New Delhi will invite pitches from bankers for the issue by 3 May and Coal India aims to file draft IPO documents by 15 June.
“The tenders to invite bids from bankers are likely to be issued today. We are targeting a July-end listing, which may spill over to the first week of August,” Coal India chairman Partha Bhattacharyya told Reuters in an interview.
The government raised $2.2 billion in March through an 8.4% divestment in state-run miner NMDC.
Coal India, which is based in the eastern city of Kolkata and produced 431 million tonnes of the mineral in 2009-10, accounts for nearly 80% of coal output in Asia’s third-largest economy.
The company expects to increase output by 7.5% in 2010-11 to 460.50 million tonnes, even as overall coal demand is likely to increase by 10% every year, Bhattacharyya said.
India’s coal requirements have jumped on growing demand from its power, steel and cement sectors as the economy grows at a pace exceeded only by China’s.
Difficulties in setting up new mines, which tend to be in populated areas, have led Indian companies to look overseas to secure supplies.
India’s coal imports are seen growing to 100 million tonnes in 2011-12 from about 80 million tonnes this fiscal year.
Coal India, which has led the move to secure overseas coal to help fill India’s yawning gap in coal supply and demand, has set aside $1.73 billion for overseas acquisitions.
It expects to invest more than half that amount in a deal with US miner Peabody Energy Corp with which it has had talks in recent weeks, Bhattacharyya said. The US firm has offered 16-17 million tonnes of coal per year at competitive prices as part of the proposed deal, he said.
The company is in talks with two other listed overseas companies for acquiring equity stakes in assets, and is also weighing five other proposals for pure offtake agreements at competitive prices, Bhattacharyya said.
Peabody said earlier this month it was in preliminary talks with the Indian miner to explore long-term coal supplies.