The divestment department wants to follow this up with a stake sale in Hindustan Copper in August and Steel Authority of India Ltd (SAIL) in September. The government hopes to earn around Rs 35,000 crore from PSU selloffs by the middle of this financial year.

The initial public offering in CIL is expected to raise over Rs 12,000 crore and will be one of the biggest PSU stake sales.

Before Coal India, Engineers India will hit the markets with a Rs 1,000-crore public issue. The SAIL issue is expected to fetch Rs 8,000 crore through the sale of government holding, and a similar amount through an issue of fresh shares.

Officials said global entities Goldman Sachs, Morgan Stanley and Citigroup were competing with 17 other investment bankers to manage Coal India’s float.

Analysts said there was a renewed interest among global merchant bankers to manage flotations by state-run firms after the government assured them of higher fees.

In the recent stake sales in NTPC, NMDC and Rural Electrification Corporation, the government paid around 0.07 per cent of the total money raised from the share sales as fees to merchant bankers.

This percentage is expected to increase to bring it on a par with private companies, said sources.

According to brokerage firm SMC Capitals, banks that led the $325-million IPO by DB Realty earned 2.13 per cent in fees, while the $160-million offer of IL&FS Transportation yielded 2.86 per cent.

Deutsche Bank, The Royal Bank of Scotland, DSP Merrill Lynch and JPMorgan Chase have also submitted bids to manage Coal India’s proposed issue, said officials in the department of divestment.

The government will appoint 4-6 merchant bankers as book-running lead managers. Domestic players such as Enam Securities, Kotak Mahindra Group and SBI Caps are also in the race.

Officials said 1 per cent of the public offer would be reserved for the employees of Coal India and its eight subsidiaries. Retail investors will get a 5 per cent discount to the final price.

Sourced from www.telegraphindia.com