Hindustan Copper OFS opens today, government to sell up to 6% stake at Rs 514 floor

The government’s offer for sale in Hindustan Copper opened for non-retail investors today, with retail participation set to open on August 26.

The floor price for the OFS has been fixed at Rs 514 per share, a 9.5% discount to the stock’s Monday closing price of Rs 567.90.

The government will sell a base 3% stake, roughly 2.90 crore shares, with an option to retain oversubscription for another 3%, taking the total offer size to up to 6% of the company’s issued and paid-up equity capital.

If the full 6% is sold, the promoter’s shareholding in Hindustan Copper would decline from 66.14% to approximately 60.14%.

A 10% reservation has been set aside for retail investors, along with a dedicated pool of 25,000 shares for eligible company employees.

At the floor price, the government could raise around Rs 894 crore from the sale, with some estimates placing the overall transaction value at close to Rs 3,000 crore.

Hindustan Copper is a public sector undertaking under the Ministry of Mines and is India’s only vertically integrated copper producer, covering mining, beneficiation and smelting.

Offer for sale transactions are a common route used by the government to meet minimum public shareholding norms or raise non-tax revenue from its stake in listed public sector companies.

The stock’s performance in the days following the OFS will be watched closely, as such sales can sometimes weigh on share prices in the near term due to the increased supply of shares in the market.

The floor price acts as the minimum bid price for institutional investors on the first day, with the final allotment price determined based on the bids received during the book-building process.

Retail investors, who get access on the second day, are typically allotted shares at either the floor price or a further discount, depending on the specific terms set for the retail category in this OFS.

Photo by Jonathan Zander, Wikimedia Commons, CC BY-SA 3.0