NEW DELHI (Bloomberg) - Coal India Ltd., the world's biggest producer of the fuel, received as much as 52.3 billion rupees ($1.2 billion) of bids on the first day of the nation's largest initial public offering (IPO).

Investors bid for 213.49 million, or 34 percent, of the 631.6 million shares on offer as of 5 p.m. local time, data on the National Stock Exchange's website showed. Most financial institutions bid on the last day of IPOs after India's market regulator in May made it mandatory for them to pay the entire application money upfront. The issue closes October 21.

"Coal India meets over 80 percent of India's demand, and that will ensure a good response to the IPO," said KK Mital, a New Delhi-based fund manager with Globe Capital Market Ltd. "Subscription is usually slow on the first day because investors don't want to lock up their money."

Sixteen of 19 investors surveyed by Bloomberg News said they plan to buy shares in Coal India. The sale is the third offering in a state company in the financial year that began in April as the government seeks to cut its budget deficit and fund infrastructure projects. Steel Authority of India Ltd., Oil & Natural Gas Corp. and Indian Oil Corp. also plan to sell shares.

Coal India's stock is being offered at 225 rupees to 245 rupees apiece, Coal Minister Sriprakash Jaiswal said on October 12. The government plans to raise as much as 151.5 billion rupees from the sale.

"The IPO will easily get subscribed and that is because the valuation is fair," Samir Arora, founder of hedge fund Helios Capital Management Pte. in Singapore, said by telephone yesterday. "That's the biggest attraction. It's a large company and it's relatively cheap."

India's coal imports surged 16 percent in the year ended March 31 as power plants burned more of the fuel to meet demand in Asia's second-fastest growing major economy. Coal India will seek environmental clearances from the government to mine in densely forested areas in states including Jharkhand and Chhattisgarh, estimated to hold half of its future output.

The IPO by Kolkata, West Bengal-based Coal India would surpass Reliance Power Ltd.'s 116 billion-rupee sale in January 2008 as India's biggest, according to data compiled by Bloomberg. Reliance Power sold shares at 450 rupees apiece and investors ordered shares worth as much as $189 billion.

The shares slumped 48 percent from the offer price on their trading debut on February 11, 2008.

India's Sensitive Index has gained 15 percent this year, the best performance among the world's 10 largest stock markets. The Sensex climbed about 47 percent in 2007, the most in four years. In 2008 the gauge fell almost 53 percent, its biggest decline.

Citigroup Inc., Deutsche Bank AG, Bank of America Corp., Enam Securities Pvt., Kotak Mahindra and Morgan Stanley are managing Coal India's offering.

The share sale will help the government raise 37.8 percent of its 400 billion rupee asset-sale target in the year ending March 31. The South Asian nation has raised 5.2 percent of its target from selling stakes in two state companies this year.

Investors are buying shares as India builds power plants and steel mills to keep pace with an economy that expanded at the fastest pace in two-and-a-half years in the three months ended June 30. India's coal demand may more than triple in the next two decades to two billion metric tonnes, Coal Minister Jaiswal said on September 24.

Companies from emerging economies in the Asia-Pacific region raised over $72 billion in initial sales this year, more than triple the amount in the same period in 2009, according to Bloomberg data. Beijing-based Agricultural Bank of China Ltd. sold $22.1 billion of shares in Shanghai and Hong Kong last quarter in the world's largest IPO.

The nation produces 530 million tons of coal a year and imports about 67 million tons annually. Coal India has proven reserves of 52.55 billion tonnes, of which 21.75 billion is extractable, the share-sale document shows.

Coal India may miss its production targets for 2011 and 2012 because of delays in environmental clearances, Chairman Partha Bhattacharyya said on October 13, without giving new estimates.