Whether one believes in the incredible hype that the Coal India share sale offer has generated or not, it seems more likely that the stock will list at a substantial premium and a lot of people will make a good amount of money out of it. Under the circumstances, it is unfortunate that the one class of people who deserved to benefit the most from this bonanza stayed away from the offer. I am talking about Coal India employees. No more than 10 per cent of the shares (one per cent of the Rs 15,000 crore issue) reserved was subscribed by the company's employees.
Apparently, this was the result of a concerted campaign by the company's unions against the issue. Because the unions were against disinvestment, they practically forbade their members from subscribing to the issue. Now, all that is left for the employees to do is to watch the stock list and ruefully count how much money they would have made had the unions allowed them to invest.
Even by the bizarre logic of the union's leftist rhetoric, this ban on employees investing in the issue doesn't make sense. It is fine if the unions do not want disinvestment in public sector units (PSUs). That's a point of view. However, since they could not succeed in stopping the share sale, it is counterproductive, even from their point of view to prevent employees from subscribing to the issue. Not only do the employees lose an opportunity to make money, but their unused quota goes to the very people (the QIBs, HNIs and the rest of the alphabet soup) whom the unions don't want to own a slice of the company. If the government is going through the motions and rituals of capitalism to fill its coffers, the employees should also do so.
It is ironic that while Indian employees have been kept out of the IPO by their unions, American retirees could be benefiting from it. If early news reports are to be believed, a number of overseas players including US-based pension funds and some individual funds have bid for more than a billion dollars worth of Coal India shares.
So far, employees have in general shown a low level of interest in all the public sector IPOs. There could be a variety of reasons for this, not just union activism. PSU employees, as a class are not the equity investing type. Also, some of the earlier issues were not attractively priced.
Or maybe the truth lies somewhere else. Perhaps the employees understand something about the future of these businesses that the rest of the world doesn't. Perhaps investment analysts should be paying more attention to what the employees are doing and less to what the investment bankers are saying.
This article first appeared in Hindustan Times on October 25, 2010
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