HAL to offer discounted shares, Govt plans to sell up to 3.5% stake via offer for sale

An exchange filing on Wednesday revealed that the Indian government is planning to divest up to 3.5% of its stake in Hindustan Aeronautics Ltd (HAL), an aerospace and defense company. The company sets the floor price for the stake sale at Rs 2,450 per share, estimating the value at Rs 2,867 crore. Although this price is at a discount to HAL’s closing price of Rs 2,625.20, the government hopes to achieve the minimum public shareholding required by the Securities and Exchange Board of India’s listing obligations through the offer for sale.

HAL

Currently, the government holds a 75.15% stake in HAL, and the company’s market cap stands at Rs 87,800 crore. The government’s previous disinvestment program in 2020 involved selling a 15% stake in HAL, which garnered a strong response from investors and raised Rs 5,000 crore.

The government divides the proposed stake sale into two parts, selling 1.75% of equity shares on March 23 and March 24, and selling an additional 1.75% stake if they exercise the oversubscription option.

The allocation of shares for retail investors will be 10% of the total offered size, provided that valid bids are received. Retail investors refer to individual investors who bid for shares with a total value not exceeding Rs 2,00,000. Therefore, the divestment of state-owned firms is a crucial means of generating revenue that enables the government to invest in infrastructure development.

Despite a target of Rs 500 crore for the financial year ending on March 31, the government has already garnered Rs 31,100 crore from the sale of its shares in state-run companies. However, the government may fall short of its divestment target for 2022/23 due to its decision to postpone the partial sale of its stake in Hindustan Zinc (HZL). This is contingent on the company canceling its proposed acquisition of two Vedanta Group subsidiaries worth nearly $3 billion.

Also Read: Latest Indian Aviation News and Aviation News

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