Government Launches Rs 3,000 Crore Stake Sale in Hindustan Copper via OFS

MUMBAI: In a significant move to bolster its disinvestment pipeline, the Indian government has initiated an Offer for Sale (OFS) to divest up to a 6% stake in state-owned miner Hindustan Copper. The sale is expected to mobilize approximately Rs 3,000 crore for the national exchequer.

Pricing and Structure

The government has set the floor price for the OFS at Rs 514 per share. This represents a strategic 11.6% discount compared to the stock’s closing price of Rs 573.60 on the BSE this past Monday.

According to regulatory filings, the government is initially offering over 2.9 crore shares, representing a 3% stake in the company. However, the offer includes an “oversubscription option,” allowing the government to divest an additional 2.9 crore shares if investor demand remains strong.

Participation for Retail Investors

The two-day bidding process commences today, August 23, for institutional investors. Retail investors will be eligible to place their bids on the second day, August 26. The Department of Investment and Public Asset Management (DIPAM) has confirmed that 10% of the total offer size is reserved specifically for retail participants, with an additional allocation of 25,000 shares set aside for eligible employees of the company.

Strategic Context

Currently, the government holds a 66.1% stake in the copper mining major. Should the full 6% stake sale be successfully completed, the government’s shareholding will be reduced to slightly above 60%. The transaction is being managed by a consortium of investment banks, including DAM Capital Advisors, Emkay Global Financial Services, and IDBI Capital Markets & Securities.

This move marks the 10th divestment effort by the government in the current fiscal year. The timing is notable, coming less than three weeks after the government successfully concluded a major sale of a 10% stake in Life Insurance Corporation (LIC), which raised a historic Rs 31,515 crore.

Impact on Divestment Targets

The current administration has set an ambitious divestment target of Rs 80,000 crore for the fiscal year. With this latest endeavor, the government has already mobilized Rs 52,716 crore across various divestments and receipts from the Specified Undertaking of the Unit Trust of India (SUUTI). Market analysts are closely watching this Hindustan Copper transaction, as it serves as a key indicator of appetite for public sector stocks in the current market environment.