Aug. 30 (Bloomberg) -- Shares of Coal India Ltd. fell below their initial public offering price after the government hired seven bankers to help sell a 5 percent stake in the world’s biggest miner of the fuel.
Coal India fell 2.2 percent to 244.9 rupees at 1:54 p.m. in Mumbai after plunging as much as 4.8 percent. Banks including Goldman Sachs Group Inc. and Credit Suisse Group AG have been hired to help India sell the stake, said three people with direct knowledge of the matter, asking not to be identified because the information is not public. The government in October 2010 sold 10 percent of the company at 245 rupees apiece.
Discounted share sales by the federal government in state-run companies including NTPC Ltd. and Steel Authority of India Ltd. have eroded their value. Prime Minister Manmohan Singh plans to raise 400 billion rupees through share sales to narrow the nation’s budget deficit, pay for subsidies and boost spending on public works.
“Government share sales have destroyed the wealth of investors like nothing else could,” said Deven Choksey, managing director at Mumbai-based KR Choksey Shares & Securities Pvt. “It should now be a corporate governance issue and someone should be held accountable.”
The government plans to raise 100 billion rupees ($1.5 billion) selling shares in Kolkata-based Coal India, trimming by half an initial plan to divest a 10 percent stake, Coal Minister Sriprakash Jaiswal said Aug. 1.
To proceed with the plan, the government must pacify trade unions, which threatened to strike work next month, fearing a further stake sale would be a step toward privatizing the company.
Five leading workers’ unions agreed to go on a strike for three days starting Sept. 23 if the government didn’t change its share sale plan in the coal miner, Jibon Roy, general secretary at All India Coal Workers Federation, said on Aug. 18. A three-day strike will mean a production loss of about 4 million tons and more than 5 billion rupees in revenue.
Deutsche Bank AG, Bank of America Corp., SBI Capital Markets Ltd., JM Financial Ltd. and Kotak Mahindra Capital were also hired by the government, the people said.
To contact the reporter on this story: Rajesh Kumar Singh in New Delhi at email@example.com
To contact the editor responsible for this story: Jason Rogers at firstname.lastname@example.org