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CIL IPO attracts Rs1.20 lakh crore from FIIs; beats this year’s inflows

New Delhi: The Coal India Ltd (CIL) initial public offer (IPO) has attracted a whopping inflow of about Rs1.20 lakh crore from foreign institutional investors (FIIs), more than the record Rs1.08 lakh crore (about $24 billion) they have invested in the Indian stocks so far this year, reports PTI.

Although about 90% of the funds are estimated to flow back after the IPO is over, the inflows have been impacting forex as well as the stock markets.

The Bombay Stock Exchange’s bellwether index Sensex has fallen since the public offer opened on 18th October as CIL issue diverted funds from other equities, while the rupee has strengthened.

The state-owned CIL IPO is the country's biggest share sale so far, with the government looking at garnering up to Rs15,400 crore by selling 10% stake in the world's largest coal producer.

Bidding for the mega IPO closed yesterday for qualified institutional buyers, which includes the foreign institutional investors, mutual funds and insurance firms. And for the portion reserved for them, the issue was oversubscribed by a whopping 24.70 times.

The IPO, priced in a band of Rs 225-Rs245 per share, closes today for retail and non-institutional buyers. Overall, the issue has been oversubscribed 12.18 times (till 12:00 pm) as per the data available with the NSE.

The IPO has attracted a demand of 493,38,72,050 shares from FIIs. Calculated at the upper end of the IPO price band, this demand is valued worth Rs1,20,879.86 crore and at the lower end worth Rs1,11,012.12 crore.

Even at the low end, the inflows are higher than what FIIs have infused — Rs1,08,379.60 crore during the entire year so far. This year's inflow of Rs1.08 lakh crore ($23.77 billion) is the highest ever investment made by FIIs in a single year.

The huge FII inflow for the CIL issue has surprised many analysts, who were expecting around Rs70,000 crore to come in from this segment.

Money/forex market dealers were expecting some temporary volatility or strength in the currency during this period.

The Indian rupee appreciated by another 4 paise to Rs44.30, against the US dollar at the Interbank Foreign Exchange market in the morning trade today on the back of strong FII inflows, and appreciating Asian currencies against dollar.

Foreign investment in the Indian stock market crossed the magic Rs1 trillion-mark ($22 billion) for the first time in history last week and analysts have predicted the overseas inflows will continue to increase in the coming months.

"India is well on the path of reverting to its high-growth orbit in the current uncertain global environment.

Thus, India would continue to attract global fund inflows, driven by its resilient domestic economy," brokerage firm Angel Broking said in a note.


Cairn must seek our approval for Vedanta deal: ONGC

New Delhi: State-owned exploration and production (E&P) major Oil and Natural Gas Corporation (ONGC) today wrote to Cairn Energy Plc insisting that the UK-based firm will need its explicit nod before it can sell its India unit to Vedanta Resources Plc, reports PTI.

ONGC, which partners Cairn India in all of its three producing assets and most of the seven exploration acreage, wrote to Cairn Energy Plc saying that it has the right of first refusal (RoFR) on these assets.

Cairn Energy, which holds 62.38% stake in Cairn India, is selling 40%-51% stake in the India unit to London-listed Vedanta Resources for $8.48 billion.

" accordance with the terms of the relevant agreements, the consent of ONGC would need to be sought for the proposed transaction," ONGC wrote to the Edinburgh-based firm.

Also, "ONGC would have the option of exercising its pre- emptive rights in relation to the participating interests held by Cairn India Ltd and/or its affiliates."

Cairn Energy insists that the deal is a corporate transaction involving sale of shares and will not trigger ONGC's pre-emption rights. Pre-emption right or RoFR, Cairn says, is triggered only in case of sale of interest in an asset like the Rajasthan block.

ONGC, however, stated that the change of control of Cairn India and acquisition of majority stake by Vedanta would "amount to an effective assignment of participating interests held by Cairn India Ltd."

"We have therefore viewed that, in accordance with the terms of relevant agreements, the consent of ONGC would need to be sought for the proposed transaction and ONGC would also have the option of exercising its pre-emptive rights in relation to the participating interests held by Cairn India Ltd and/or its affiliates," ONGC wrote.

ONGC asked Cairn Energy to provide full details along with copies of the agreements and other arrangements entered into with Vedanta "and the details of proposed buyers financial strength, technical capability and past experience in the field of oil and gas."

Cairn, on 16th August, announced the deal and approached the government for clearances about a month later.


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