Govt to sell up to 7% stake in HUDCO via OFS on Oct 18-19, likely to raise ₹1,100 crore

The government will sell 7% equity in Housing And Urban Development Corp. Ltd (Hudco) via an offer for sale (OFS) on 18-19 October that is likely to fetch it around ₹1,100 crore, a senior government official said.

“Offer for sale in Hudco opens tomorrow for non-retail investors. Retail investors can bid on Thursday. Government will divest 7% equity including a green shoe option of 3.5%,” Tuhin Kanta Pandey, secretary of the department of investment and public asset management, said in a post on X, formerly known as Twitter, on Tuesday.

The government has set the floor price for the offer at ₹79 per share, 12% below the closing price of ₹89 on the BSE on Tuesday, and intends to sell about 140 million shares. The total value of shares comes to about ₹1,106 crore.

The first day of the offer would be open for retail investors, followed by the second day for non-retail investors. There will be no retail discount for the offer, the public sector company said in a filing with the BSE on Tuesday.

The company added that the OFS is being undertaken to comply with the Securities and Exchange Board of India’s (Sebi) minimum public shareholding norms. The Centre currently owns 81.8% in the housing finance company, and by offloading 7% shares, its stake will come down to 74.8%—below the maximum permissible 75%.

The stake sale will be in line with the government’s divestment strategy, where it intends to bring down its holding in listed companies in order to meet the Sebi norms.

Elara Securities (India), IDBI Capital Markets & Securities and SBICAP Securities will be brokers for the sale.

The proceeds will go toward the Centre, which has set a target of ₹51,000 crore from disinvestment in FY24. As of 17 October, the government had been able to garner ₹6,950 crore, primarily from selling a 3% stake in Coal India Ltd, 5.36% in Rail Vikas Nigam Ltd and 4.92% share sale in SJVN Ltd.