Home / Market / Stock-market-news /  Govt to sell 7% stake in Hindustan Copper today

Mumbai: The government will sell a 7% stake in state-run miner Hindustan Copper Ltd through a two-day offer for sale (OFS) beginning Thursday, the firm said.

The government has set a floor price of Rs62 per share, a 5.12% discount to Wednesday’s closing share price. The secondary market transaction, comprising 64.76 million shares, will help the government raise Rs401.54 crore.

On Wednesday, Hindustan Copper shares closed at Rs65.35 per share on BSE, up 0.62% from the previous close. The stock has touched a high of Rs73.60 and a low of Rs42.30 in the past 52 weeks.

Under the revised Securities and Exchange Board of India (Sebi) rules for OFS introduced in February 2016, institutional and other non-retail investors will be permitted to place bids on the day of offer (T+0). Retail investors, for whom 20% of the offer is reserved, will be permitted to bid shares one day after the trade date (T+1 basis). Retail investors will be eligible for a 5% discount on the cut-off price. The government’s stake will decline to 82.95% following the sale. The government holds an 89.95% stake in the copper producing company as on June 2016, stock exchange data showed.

Hindustan Copper is the second divestment by the government this fiscal. So far, the government has managed to raise around Rs2,716 crore.

The centre had sold an 11.36% stake in state-owned hydro power producer NHPC Ltd as part of the FY17 disinvestment plan. The government’s holding fell to 74.6%, making it compliant with the Sebi’s 25% minimum public shareholding norm for public sector units (PSUs), excluding state-owned banks.

In addition to the stake sale in PSUs, the government has also approved a share buyback plan by cash-rich PSUs.

Coal India Ltd will begin its Rs3,650 crore share buyback on 3 October, as per a stock exchange filing on 27 October. The world’s largest coal mining firm will acquire 108.95 million shares at Rs335 apiece. The buyback will be through a tender route, which will also enable the government to participate in the offer.

On 25 May, National Aluminium Co. Ltd (Nalco) approved a share buyback plan for 644.3 million shares from public shareholders, accounting for 25% of the paid-up capital. The company is yet to announce an offer price.

Mint reported on 16 May that the government would also engage in share buybacks as a tool to achieve its disinvestment target for the current fiscal. Finance minister Arun Jaitley had outlined the government’s strategy of using money lying with cash-rich PSUs in a volatile market situation. This would follow minority sale and strategic sales as market situation improved.

The government has set a disinvestment target of Rs56,500 crore in state-owned enterprises in 2016-17. Of this, Rs36,000 crore will come from minority stake sales and Rs20,500 crore has been targeted from strategic stake sales.

In 2015-16, the government had set a record target of raising Rs69,500 crore through disinvestment, comprising Rs41,000 crore by way of a minority stake sale and an additional Rs28,500 crore from strategic sales. However, the government only managed to raise Rs32,148 crore in divestment receipts in the entire fiscal.

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