Hindustan Zinc Ltd (HZL) shares saw a boost of over 3% following news that an Offer for Sale (OFS) of the company’s shares is likely before the end of the financial year 2024-25. The update, reported by CNBC-TV18, indicates that the Indian government is revisiting its plans to divest its stake in Hindustan Zinc.
Key Points on the OFS:
- Government Stake: As of June 30, 2024, the Indian government holds a 29.54% stake in Hindustan Zinc, while promoter Vedanta owns 64.92% of the company. Vedanta’s stake is largely pledged, although they recently unpledged about 4% of it using proceeds from an institutional share sale.
- Sale Plans: The government is considering selling its stake in multiple tranches rather than all at once. This decision aligns with the aim to protect the interests of minority shareholders and is a response to previous legal challenges that delayed the sale.
- Regulatory Framework: According to SEBI regulations, Vedanta is restricted from acquiring more than a third of the shares offered in the OFS.
- Management Insights: Management from Hindustan Zinc has confirmed that the timing of the OFS is under government review, with preparations ongoing.
- Previous Targets: The government had initially aimed to complete the sale by the end of the 2023 financial year but faced delays due to litigation issues.
The anticipated OFS comes as part of the government’s strategy to reduce its holdings in Hindustan Zinc while ensuring that the process does not adversely affect the market