Coal India divestment meets FPI resistance

New Delhi, Dec. 13 (PTI): Opposing an immediate stake sale in Coal India Ltd, foreign portfolio investors (FPI) have told the finance ministry that further divestment in the coal miner should be put off as the current market valuation is low.

Foreign investors such as Fidelity, Wellington Management and BlackRock have also conveyed that they may look at selling their holding in Coal India since the share price can plummet further in case the divestment happens soon, sources said.

The cabinet had last month approved a 10 per cent divestment in Coal India, which could fetch about Rs 20,000 crore at the current market prices.

"Long-term investors have clearly told the disinvestment department that stake sale should not happen now as valuations are very low. They have said they will not invest and rather sell their current investments if the government proceeds with a stake sale," a source said.

The department of disinvestment is also of the view that the current market scenario is not conducive to a major stake sale like that of Coal India.

"In today's date, there is no scope for Coal India," an official said.

In January, the Centre had sold a 10 per cent stake in the company at a floor price of Rs 358 apiece. It had fetched about Rs 22,600 crore to the exchequer. However, the share price of the PSU has declined over 14 per cent since then and has come down to Rs 307.

The government had last month shortlisted five Indian merchant bankers, including JM Financial, SBI Capital and ICICI Securities, to manage the over Rs 20,000-crore stake sale in Coal India.