HZL OFS Receives Over Rs 3,400 Crore in Bids from Institutional Investors, Greenshoe Option Activated

The government's offer-for-sale (OFS) of over 4.75 crore shares of Hindustan Zinc Ltd (HZL) to institutional investors saw strong demand on Wednesday. Institutional investors placed bids worth nearly Rs 3,400 crore. On the first day of the two-day OFS, bids were received for more than 6.69 crore shares, which is 1.41 times the shares available for institutional buyers. The sale will open to retail investors on Thursday.

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The government, holding a 29.54% stake in HZL, is the largest minority shareholder in the Vedanta Group company. Through this two-day OFS, it aims to sell over 5.28 crore shares, representing a 1.25% stake, with an option to retain additional subscriptions of a similar amount. This greenshoe option allows for flexibility in accommodating extra demand.

Institutional Investors Show Strong Interest

On Wednesday, institutional investors bid for more than 6.69 crore HZL shares at an indicative price of Rs 505.51 per share by 1530 hours. This was against the more than 4.75 crore shares reserved for them. If the entire 2.5% stake on offer is fully subscribed, the sale could bring in over Rs 5,000 crore to the exchequer.

Shares of HZL closed at Rs 513.15 each on the BSE, marking an 8.28% decline. The proceeds from this stake sale will contribute to the government's disinvestment target. So far this fiscal year, the government has raised Rs 5,176 crore through minority stake sales in Central Public Sector Enterprises (CPSEs).

Government's Strategic Move

The enthusiastic response from non-retail investors prompted the government to exercise the greenshoe option, as confirmed by Tuhin Kanta Pandey, Secretary of the Department of Investment and Public Asset Management (DIPAM), on X. This strategic move aims to maximise returns from the sale while maintaining market stability.

The funds generated from this transaction will bolster the government's disinvestment efforts, supporting its financial objectives for the current fiscal year. The success of this OFS reflects investor confidence in HZL and aligns with broader economic goals.

This initiative is part of a larger strategy to optimise government holdings in public enterprises while ensuring efficient capital allocation and enhancing shareholder value.