Centre may garner ₹720 crore from Hudco OFS

“Offer for Sale of GoI equity in HUDCO opens tomorrow for Non-Retail investors. Day 2 for Retail investors. Government would divest 5.5% shares with an additional 2.5% as Green Shoe Option,” Department of Investment and Public Asset Management secretary Tuhin Kanta Pandey tweeted on Monday.

HUDCO informed stock exchanges that if the oversubscription option is exercised, the equity shares forming part of the Base Offer Size and the Oversubscription Option will represent a little over 160 million (8% stake) equity shares of the company.

The floor price for the OFS has been kept at ₹45 per share. On Monday, the share price of the public sector undertaking closed at ₹47.5, falling 6.22% from its previous close.

Hudco is a ‘Miniratna’ firm which provides loans for housing and urban infrastructure projects and was listed in the stock market in May 2017. Hudco’s net profits rose by 19.4% to ₹526.38 crore in the March quarter of FY21.

The central government so far has garnered ₹7646 crore through disinvestment so far in FY22. It sold 1.95% stake sale in Axis Bank held through the Specified Undertaking of the Unit Trust of India (SUUTI) in May and earlier this month sold 7.49% stake in NMDC Ltd. DIPAM has invited proposals from investment bankers and legal advisers to manage the initial public offering of Life Insurance Corporation which is expected to debut in the stock exchanges in the March quarter next year.

The government’s ambitious disinvestment schedule for FY22 may get delayed because of the second wave of the covid-19 pandemic. However, DIPAM is confident that the ₹1.75 trillion target is still achievable. With revenues expected to shrink for the second consecutive year in FY22, achieving the disinvestment target will be crucial for the finance ministry.