Mahanadi Coalfields IPO may open next week with issue near 10,000 crore

what happened

Mahanadi Coalfields (MCL), a fully owned unit of Coal India, is preparing to bring its IPO to market next week, according to Moody's, citing people familiar with the matter. The offering could open on November 19 and close on November 23, with a total size of about 10,000 crore rupees. The price band is expected to be disclosed on Monday, November 16. Sebi cleared the share sale on November 4.

The deal is an offer for sale of up to 66.18 crore shares by Coal India, which plans to sell as much as 10% of its MCL stake. No new shares will be issued, so all proceeds will go to the parent. Five domestic firms, led by SBI Capital Markets and Axis Capital, are running the transaction alongside BOB Capital, IDBI Capital and IIFL Capital. Emails sent to the bankers had not been answered at the time of reporting.

The listing continues Coal India's effort to unlock value in its subsidiaries. Bharat Coking Coal went public in January and CMPDI followed in March. South Eastern Coalfields has also filed draft papers and is waiting for Sebi's go-ahead.

why it matters

For markets, the deal is a test of investor appetite for Indian coal-sector shares and a source of cash for Coal India, which will keep about 90% of MCL. A string of subsidiary listings this year suggests the parent wants investors to see the value of its units. The pricing will matter for how the wider group is valued.

market impact

Coal India: selling up to 10% of a unit brings cash to the parent and tests demand for Indian coal stocks

• ↔Coal India shares mixed — proceeds go to the parent, but it gives up part of MCL's future earnings to new holders

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