1 week ago
Hindustan Copper Shares Fall as Government Launches 6% Stake Sale
The Government of India wants to sell some of its shares in Hindustan Copper.
It is first offering 3% of the company and may sell another 3% if enough investors want the shares.
The government set the minimum offer price at ₹514 per share.
This price is about 10% lower than Hindustan Copper’s previous market price.
Because the offer was cheaper, the company’s share price fell sharply during trading.
Large investors can bid on August 25, while ordinary investors and eligible employees can bid on August 26.
Ten percent of the offer is reserved for retail investors, and 25,000 shares are reserved for eligible employees.
If the entire offer is sold at the minimum price, the government could receive about ₹3,000 crore.
Hindustan Copper shares fell between 6.71% and 7.29% in Tuesday trading after the government launched an OFS.
The Government of India set the OFS floor price at ₹514 per share, roughly 10.4% below Monday’s reported closing price.
The offer comprises an initial 3% stake sale and a 3% green-shoe option, totaling more than 5.80 crore shares.
Non-retail investors can bid on August 25, while retail investors and eligible employees can bid on August 26.
The government held 66.14% of Hindustan Copper at the end of the June quarter and could raise about ₹3,000 crore if the full offer sells at the floor price.
- Who
- The Government of India is selling shares in Hindustan Copper; institutional, retail and eligible employee investors can participate.
- What
- An Offer for Sale will initially divest 3% of Hindustan Copper, with an additional 3% green-shoe option.
- Where
- The OFS is being conducted through the NSE and BSE, with the NSE as the designated exchange.
- When
- Bidding is scheduled for August 25 and August 26, with settlement on August 27.
- Why
- The sale is part of the government’s public-sector disinvestment programme and aims to generate resources.
Market and investor concerns
Government disinvestment rationale
Discounted offer price
Market and investor concerns
The floor price, roughly 10.4% below the reported previous closing price, increased selling pressure and contributed to the stock’s sharp decline.
Government disinvestment rationale
The government set a discounted floor price to attract investors to the OFS.
Increased share supply
Market and investor concerns
The sale adds a large block of shares to the market and could reduce the government’s ownership.
Government disinvestment rationale
Selling up to 6% supports the government’s broader public-sector disinvestment programme.
Participation timing
Market and investor concerns
Retail investors could not bid during the first phase, which was reserved for non-retail investors.
Government disinvestment rationale
The offer includes a 10% retail reservation and a separate allocation of 25,000 shares for eligible employees.
Key facts
- Company
- Hindustan Copper Limited
- OFS floor price
- ₹514 per share
- Stake offered
- 3% initially, plus a possible 3% green-shoe option
- Shares offered
- More than 5.80 crore shares; the initial 3% portion comprises 2,90,10,721 shares
- Government ownership
- 66.14% at the end of the June quarter
- Investor reservations
- 10% for retail investors and 25,000 shares for eligible employees
- Estimated proceeds
- Approximately ₹3,000 crore if the full offer is sold at the floor price
- Settlement
- August 27, because August 26 is a clearing holiday
Quotes
DIPAM secretary
Secretary of the Department of Investment and Public Asset Management
“Government of India offers to divest 3% equity in Hindustan Copper Limited (HCL) through an Offer for Sale (OFS), with an option to divest an additional 3% (green shoe) in case of oversubscription. The OFS will open at a floor price of Rs 514 per share.”
news18.com
Sources
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