The central government has taken another big step towards reducing its stake in government companies and meeting the disinvestment target for the current financial year. The government is going to sell up to 3% stake in Hindustan Copper Ltd (HCL), a major public undertaking (PSU) company in the mining sector, through Offer for Sale (OFS).
According to the information given by the Department of Investment and Public Asset Management (DIPAM), the floor price for this OFS has been fixed at ₹514 per share. To promote small and retail investors, 10% of the total offer has been reserved as Retail Investors Quota.
Full structure of Offer for Sale (OFS) and green-shoe option
The government is disinvesting its shareholding in the company through this OFS in two phases:
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Base Size (Base Offer): The government will initially own the total paid-up equity capital of the company. 1.5% share (about 1.45 crore equity shares) will be sold in the market.
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Green-shoe Option: In case of heavy demand and oversubscription from institutional and large investors, additional 1.5% stake The option to sell (oversubscription option) has also been kept open.
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Total Sales: By combining both the parts, the government will sell a total of 3% stake in Hindustan Copper, which is expected to generate revenue of more than ₹1,500 crore for the exchequer.
When and how will the bidding window open?
The bidding process under the OFS rules of the stock exchange will be conducted on two separate days:
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Day 1 – Non-Retail Investors: On the first day, only non-retail investors—such as mutual funds, insurance companies, foreign institutional investors (FIIs) and large corporates—will be able to bid at or above the floor price.
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Day 2 – Retail Investors: On the second day, individual retail investors (whose total investment is up to ₹2 lakh) will be able to bid.
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Unsubscribed Quota Transfer: If there are any shares left from the non-retail category, the same can also be made available to retail investors.
Floor price and current market price situation
The floor price of ₹514 per share set by the government has been set at a marked discount to the prevailing market price, to provide an attractive opportunity to both institutional and retail categories of investors to participate in the stock.
At present the total stake of Government of India (promoter) in Hindustan Copper is about 66.14%. Even after this entire sale of 3%, the government’s control and majority stake in the company will remain more than 63%.
How can retail investors participate?
The process for retail investors to participate in this OFS is completely digital and simple:
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Investors can invest their existing Demat & Trading Account You can place orders directly by visiting the ‘OFS’ section of your broker’s trading app/website.
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A maximum of ₹2,00,000 can be bid under the retail quota.
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The allotment of shares will be made directly into the demat account on the basis of floor price or above cut-off price under ‘T+1’ settlement cycle.
In view of the increasing industrial demand for copper in the global market, its increasing use in electric vehicles (EVs) and renewable energy sector, market experts believe that this OFS of Hindustan Copper may get a strong response from investors.