Govt To Sell 15% Stake In HAL – Free PDF Download

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What is offer for sale?

Offer for sale (OFS) is a simpler method of share sale through the exchange platform for listed companies.
The mechanism was first introduced by India’s securities market regulator Sebi, in 2012,
To make it easier for promoters of publicly-traded companies to cut their holdings and comply with the minimum public shareholding norms by June 2013.
Later, the government started using this route to divest its shareholding in public sector enterprises.

Unlike a follow-on public offering (FPO), where companies can raise funds by issuing fresh,
The OFS mechanism is used only when existing shares are put on the block.
Only promoters or shareholders holding more than 10 per cent of the share capital in a company can come
up with such an issue.
The government will sell up to 15% stake in Hindustan Aeronautics (HAL) through an offer for sale (OFS).
This could fetch about Rs 5,000 crore to the exchequer.

The floor price for the offer has been fixed at
Rs 1,001 per equity share of the company.
The price is at 15% discount to Wednesday’s closing price of Rs 1,177.75.

The government owns 97% stake in state-owned Hindustan Aeronautics.
It was listed on the stock exchanges in March 2018.
The government proposes to sell 3,34,38,750 equity shares, constituting 10% paid-up share capital of the company,
With an option to sell an additional 5% stake or 1,67,19,375 equity shares (oversubscription option).

The OFS will take place on August 27-28 on a separate window of the stock exchanges,
HAL said in a regulatory filing.
The company said in the regulatory filing that 20% of the offer size will be reserved for retail investors and 25% for mutual funds.
IDBICapital Markets & Securities, SBICAP and YES Securities (India) will be acting as the settlement broker for the offer.

The covid-19 pandemic has caused major problems for the Indian government.
Govt looks to mobilize resources amid the Covid-19-induced pressure on its finances.
It had set itself an ambitious divestment target of Rs2.1 trillion for this fiscal.
Earlier this month, the government extended the deadline for submission of bid for the divestment of BPCL.
Meanwhile, the government is also preparing Life Insurance Corp of India (LIC) for an initial public offering.
The government is also planning to sell part of its stake in IRCTC.