How the offer for sale of HAL will be done
On 23rd March 2023, the offer or sale (OFS) by Hindustan Aeronautics Ltd (HAL) opened for the non-retail investors. The retail portion will get to subscribe to the OFS on Friday, the 24th of March 2023. Here are some of the highlights of the OFS of HAL.
The OFS will have a base size of 58,51,782 shares on offer representing 1.75% of the equity base of HAL. However, the government has been allowed to retain an additional 58,51,782 shares in the event of subscription. Thus if the full additional subscription is retained, then the overall size of the OFS would be 1,17,03,564 shares overall on offer.
The floor price of the OFS has been set at Rs2,450 per share, which will be the lowest at which the investors can bid in the OFS. If the entire 117.04 lakh shares get subscribed in the OFS, then the government would raise a total sum of Rs2,867 crore through the divestment of 3.5% stake in HAL.
This will make the divestment number look more respectable. The original disinvestment target for FY23 was Rs65,000 crore which was scaled down to Rs50,000 crore in the FY24 budget announcement. However, as of date, a little above Rs31,000 crore has been collected via disinvestments, leaving a shortfall of Rs19,000 crore.
The bidding will be done separately in the non-retail category (IS series) and in the retail category (RS series). While the former has bid on Thursday 23rd March 2023, the latter will bid on Friday, 24th March 2023. Members can carry forward their unallocated non-retail bids for T+1 day will have to modify their bids and opt for carry forward.
The bidding time for the non-retail bidders on 23rd March 2023 was between 9.15 am and 15.30 pm. Bids can be carried forward to the next day for unallocated bids in non-retail category. The retail category on 24th March 2023, can bid at cut-off price between 9.15 am and 15.30 pm. There is 10% reservation in the retail portion for retail investors putting applications only up to Rs2 lakhs.
If there is any unsubscribed portion of the retail category, it will be reallocated to the non-retail segment. This will only be applicable to the non-retail investors who choose to carry forwards their bids to the next day.
There is no discount that is being offered to the retail investors in the OFS. The seller, in this case the government of India represented by DIPAM, may opt to cancel the offer before the opening of the bids and in such case the government can once again approach the market after a cooling period of 10 days.
Like in the IPO, the retail investors have the choice to either bid a specific price or they can even just opt to bid at cut-off price. The idea of bidding at cut-off is that if the final discovered price is more than the bid price, then the bids will not be rejected. However, this facility of bidding at cut-off is only available to the retail portion.
The demand is expected to be robust overall for the FPO from the retail category too.
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