India will use an offer for sale to sell up to a 3.5% stake in its aerospace and defence company, Hindustan Aeronautics (HAL) (OFS). The sale will start on March 23 and go through March 24. The 3.5% stake sale was made up of a base offer of 1.75% and an option of 1.75%. Through this deal, the government wants to get more than 2,867 crore.
According to the regulatory filing, the Indian government wants to sell up to 58,51,782 equity shares, or 1.75 percent of HAL, through an OFS base offer. Each equity share is worth 10 yen to the company.
Also, the Centre has the option to sell another 1.75 percent, or 58,51,781 equity shares in HAL, if they don’t get enough bids.
Taking into account the base size and the possibility of oversubscription, the Centre wants to sell 11,703,563 equity shares in HAL, which is 3.5% of the company.
The floor price of the OFS is set at 2,450 per equity share. This is 6.67% less than what HAL is selling for on the BSE market right now.
The government hopes to get 2,867.37 crore from the sale of these shares.
Also, OFS will be done on both the BSE and the NSE. The OFS will happen in a separate window on exchanges.
On March 23, the first day of the OFS, non-retail investors will be able to bid on HAL. These investors who aren’t retail customers have the option of putting their unallocated bids in the retail category that hasn’t been filled up yet.
That being said, the retail category will be able to bid on March 24. Also, non-retail investors who chose to keep their bids even though they weren’t chosen can bid on this day.
10% of the size of the offering will be set aside for individual investors. Based on the floor price, the stock exchanges will decide how many shares can be put into the retail category.
Retail investors are people who place bids on exchanges for a total value of no more than 2 lakh worth of shares. But there is no discount for this category.
Except for mutual funds and insurance companies, no single bidder will get more than 25% of the offered shares.
Also, under the OFS, any unsubscribed portion of the Retail Category after allocation shall be eligible for allocation in the Non-Retail Category in respect of their unallotted bids on T Day who choose to carry forward their bid to T+1 Day.
Also, 5% of the total size could be offered to eligible and willing HAL employees at the retail category’s cut-off price. The category of employees can also apply for up to 2 lakh worth of shares.
Brokers for the OFS include IDBI Capital Markets & Securities, SBICAP Securities, and Yes Securities.
On Wednesday, each HAL share was worth 2,625.20 less than it was the day before.