Shares of Hindustan Zinc fell over 7% in early trading on Friday following the announcement that its promoter, Vedanta Ltd., will sell 13.37 crore shares of the subsidiary through an Offer for Sale (OFS). This sale represents 3.17% of Hindustan Zinc’s total equity.
How Much Stake Vedanta Will Hold Now?
Vedanta, which currently holds a 64.92% stake in Hindustan Zinc, announced on Wednesday that it will now sell 13.3 crore shares, representing 3.17% of the total equity. This is an increase from the earlier plan to sell 11 crore shares, or 2.6% of the total equity, as part of the OFS.
What will be the floor price of OFS?
Vedanta has set the price for the Offer for Sale at Rs 486 per share, which is a 15% discount to Hindustan Zinc’s closing price on Wednesday. The OFS will open today for non-retail investors and on Monday for retail investors.
If Vedanta manages to sell all 13.37 crore shares at the floor price, the company stands to raise Rs 6,500 crore.
In related news, Hindustan Zinc’s board is scheduled to meet on August 20 to consider the proposal for a second interim dividend. The company had previously declared its first interim dividend of Rs 10 per share in May this year.
Stock Performance in Last 1 year
In terms of stock performance, Hindustan Zinc faced a mixed bag of results. In the last month, the stock has given negative returns of 18.60%, showcasing a downtrend movement. However, in the past 6 months, the stock has experienced positive returns of 72.11%, indicating a period of uptrend.
Year-to-date figures continue to be in positive territory, depicting a jump of 69.29%. Over the last twelve months, the stock managed to maintain positive returns of 71.53%, highlighting its resilience in the longer term.
What is OFS?
The Offer for Sale (OFS) mechanism has been updated by SEBI to include non-promoters of eligible companies. Previously, only promoters and their group entities could use the OFS to sell shares and meet the minimum public shareholding requirement of 25%. Now, non-promoters holding at least 10% of a company’s share capital can also participate.
This expansion, introduced by SEBI in 2012, simplifies the process for both promoters and large shareholders to reduce their holdings. The OFS mechanism remains available to the top 200 companies by market capitalization, providing a transparent way to sell shares.