LIC top non-promoter shareholder in CIL

Life Insurance Corp has emerged as the largest non-promoter shareholder in Coal India Ltd (CIL) with 7.78 crore shares or a stake of 1.23%, pipping The Children’s Investment (TCI) Fund Management of the UK which now has a 1.01% stake (or 6.36 crore CIL shares).

CIL, one of the largest companies in the country in terms of market capitalisation, has been at the receiving end of hedge fund TCI’s ire in recent times.

As the single largest shareholder after the government, TCI has been fighting a legal case against CIL over charges of mismanagement and ignoring shareholders’ interests.

But in the March quarter, LIC overtook TCI. Even as LIC bought into CIL, TCI cut its holdings to 1.01% from a high of 1.35% in November.

LIC is known for bailing out many initial public offerings or IPOs and divestment issues of state-backed companies.

But it had not played a key role in CIL’s mega public offering as there was an overwhelming response from foreign institutional investors (who see coal as a scarce and hence precious commodity).

Until recently, LIC did not pick up CIL shares from the secondary market either, market observers said.

But LIC raised its CIL stake significantly in the March quarter when the scrip eased from a level of Rs 360 to Rs 309 by March-end after hitting a low of Rs 295 on March 25.

After getting listed at Rs 287, a 17% premium to its issue price, CIL scrip hit a high of Rs 404 in June 2011, briefly becoming the highest capitalised company, before a rollercoaster ride ensued.

Observers said LIC, given its penchant for bailing out divestment issues, may raise its CIL stake further as the government is planning a 10% stake sale through a combination of an ‘offer for sale’ or OFS and a buyback. That coal is no longer an object of desire now would be a minor detail for LIC.