The Indian government is planning to offload up to 7% stake in Housing And Urban Development Corp Ltd (HUDCO) through an offer for sale (OFS) that will take place on October 18-19, as per a regulatory filing. The floor price for the offer has been set at ₹79 per share, which is approximately 12% lower than the closing price of ₹89 on the BSE on October 17.
This stake sale is expected to raise about ₹1,100 crore for the government, as it involves offloading approximately 14 crore shares.
On the first day of the OFS, a total of 7 crore shares will be offered for sale, accounting for 3.5% of HUDCO’s overall stake. The base offer will be followed by an oversubscription option on the next day. The oversubscription option, known as the greenshoe option, will also comprise 7 crore shares or 3.5% stake.
The offering will follow a schedule where the first day is reserved for retail investors, while the second day allows non-retail investors to place bids. Notably, there will be no retail discount for the offer, as clarified in the exchange filing.
The brokers for this OFS are Elara Securities (India), IDBI Capital Markets & Securities, and SBICAP Securities. This stake sale aims to help the government achieve the minimum shareholding required for the company, in accordance with the norms established by the Securities and Exchange Board of India (SEBI). Currently, the government owns 81.8% of the housing finance company. By offloading 7% of its shares, the government’s stake will decrease to 74.8%, which is below the maximum permissible cap of 75%.
The divestment of the stake is part of the government’s broader divestment strategy. The government has set a target of ₹51,000 crore for divesting stakes in public sector and state-owned companies in the fiscal year 2023-24. So far, in this fiscal year, it has already offloaded stake worth ₹6,950 crore.
The OFS in HUDCO is a significant step towards achieving this divestment target and aligning with the government’s financial goals.
