Last week, Securities and Exchange Board of India (Sebi) had issued a circular extending the OFS mechanism for non-promoter shareholders. The market watchdog also expanded the OFS mechanism for companies falling in the top-200 companies by market capitalisation in any one of the last four quarters. Earlier, the OFS mechanism was limited to top-100 companies. As per Prime Database, in CY13, R23,963 crore was raised through the OFS route with promoters looking to meet the minimum public shareholding norms.
Experts feel the new norms are attractive for the large shareholders like private equities. Instead of selling in a block, private equity players can look for exits through this route, said Pankaj Jaju, executive director, investment banking division, Axis Capital.
Within the BSE 200 companies, the private equity firm TPG India Investments holds 1.34-lakh shares of Shriram City Union Finance, which represents 20.37% stake in the company, show Capitaline data. At the latest closing price of R1624.50, the current value of these shares stand at R2,180 crore.
Meanwhile, LIC holds more than 10% stake in 13 companies, which meet the revised eligibility norms for the OFS mechanism.
At the latest closing price, the total value of these holdings stand at R1.24 lakh crore.
Market observers believe the large investors can reach a wider base through the OFS route. Selling through an open market transaction would involve just a limited number of parties. However, through an OFS, large investors such PEs and LIC can sell to a wider base. The OFS route could give PEs easier exits, said Pranav Haldea, managing director, Prime Database.
Last week, Bharti Infratels promoters Bharti Airtel sold 4.5% of their stake in Bharti Infratel through a R2,125 crore OFS to meet Sebis minimum public shareholding norms.