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The Government of India has initiated an Offer for Sale (OFS) to divest up to 3% of its equity in Indian Overseas Bank, aiming to raise around INR 2,000 crore. The sale includes a base offer of 2% with an option to sell an additional 1% depending on demand. Shares are being offered at a floor price of INR 34 each. The move is part of efforts to improve public shareholding levels and enhance market liquidity in the state-owned lender.
The Government of India has announced the sale of up to 3% of its shareholding in Indian Overseas Bank (IOB) through an Offer for Sale (OFS) on the stock exchanges. The divestment is expected to generate approximately INR 2,000 crore and will be carried out in a structured manner across two trading sessions. The floor price for the offer has been fixed at INR 34 per share, offering investors an opportunity to participate in the public sector lender's equity. Advertisement
The OFS consists of a base sale of 2% equity, with a green shoe option allowing the government to offload an additional 1% stake if investor demand remains strong. The first phase of the sale is reserved for non-retail investors, including institutional buyers such as mutual funds and insurance companies. Retail investors and eligible employees of the bank are allowed to participate in the subsequent phase, in line with regulatory guidelines.
Prior to the stake sale, the government held more than 94% equity in Indian Overseas Bank, which is significantly above the minimum public shareholding requirement mandated for listed companies. The current divestment is intended to gradually align the bank with these norms while increasing free float and improving trading volumes in the stock.
Indian Overseas Bank, which was placed under the Prompt Corrective Action framework in earlier years due to weak asset quality and capital constraints, has shown improvement following capital support and operational measures. The government has previously infused capital into the bank to strengthen its balance sheet, making partial stake dilution possible without impacting control.
The announcement of the OFS led to movement in IOB's share price, reflecting typical market response to government stake sales in public sector banks. Similar divestments in other state-owned lenders in recent months indicate a consistent approach by the Centre to mobilise non-debt resources while maintaining majority ownership.
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