Coal India’s record $3.5bn share sale might be in great demand – it was subscribed more than 15 times the offering – but accounting errors that emerged in its IPO prospectus on Friday are a reminder that the state-run group has poor corporate governance standards.
Investors have even been given the option of withdrawing their subscription bids after India’s capital markets regulator found that figures in Coal India’s prospectus had been mistakenly interchanged. Few, however, are likely to pull out.
Coal India’s bankers won’t have much trouble getting the IPO away with the $3.5bn offer subscribed 15 times over when the books closed.
With $48.7 billion of bids in hand when the offer ended for both institutional and retail investors, the government is sitting pretty. It is in the happy position of being able to price the sale of the state-run corporation at the high end of the 225-245 rupee per share range, giving Coal India a likely market value of around $35bn.
On the first day of Coal India’s much awaited $3.5bn share sale, which is set to be the country’s biggest IPO ever, the state-owned miner attracted $1.2bn of bids on Monday: a decent start for an offer that will close on Wednesday for institutional investors, and a day later for retail buyers.
In India most bids tend to come in on the final day. That’s why the optimistic bankers working on the deal predict it will be ten times over-subscribed. Investors, it seems, are expecting the shares to perform strongly on the back of growing demand for energy globally.