The government will sell 1.75 per cent of its stake in Hindustan Aeronautics Ltd (HAL) through offer for sale, better known as auction method, on Thursday and Friday. At the floor price, the government expects to get over ₹1,400 crore, which would be ₹2,800 crore in case green-shoe option is exercised.
While 10 per cent of the offer size is reserved for retail investors,5 per cent has been reserved for employees.
According to a notice sent by the Defence Ministry to exchanges, the government proposes to sell around 58.52 lakh shares, which is 1.75 per cent of the total shares. It also has the option to additionally sell 58.52 lakh shares. It means if green shoe is also exercised fully, the government will offer 3.5 per cent of its stake bringing its stake to 71.60 per cent.
Will meet public holding norm
In case green-shoe option is not exercised, then government share will come down to 73.4 per cent. In both the situations, the company will be able to fulfil minimum public shareholding norm of 25 per cent. The offer for sale is being undertaken for achieving the minimum public shareholding of the company in accordance with Securities and Exchange Board of India’s listing obligations, the company said.
The government has set the floor price, the minimum price to bid, at ₹2,450, 6.7 per cent less than Wednesday’s closing price of ₹2,625.20.
All the non-retail investors — institutional and high net-worth individuals — can place the bid on March 23, while retail can bid on March 24. Indicative price for non-retail category will be displayed separately, but there will be no indicative price for the retail category. No single bidder other than mutual funds and insurance companies will be allocated more than 25 per cent of the offer shares.
History of HAL
HAL had its origin as Hindustan Aircraft Ltd, incorporated on December 23, 1940, at Bangalore, by Walchand Hirachand, in association with the then Government of Mysore, with the aim of manufacturing aircraft in India. In March 1941, the government of India became one of the shareholders in the company and subsequently took over its management in 1942.
In collaboration with the Inter Continental Aircraft Company of the US, the company commenced its business of manufacturing Harlow Trainer, Curtiss Hawk Fighter and Vultee Bomber Aircraft. In January 1951, HAL was placed under the administrative control of the Defence Ministry.
HAL closed the three-month period ending December 31, 2022, with a turnover of ₹5,666 crore and net profit of around ₹1,154 crore. The current market-cap of the company stands at ₹87,800 crore.