News

Published: November 5, 2024
Updated: November 5, 2024

Government to Sell 2.5% Stake in Hindustan Zinc, Aiming to Raise Rs 5,900 Crore

2.5% Stake Sale at Discounted Price

The Central government announced plans to sell a 2.5% stake in Hindustan Zinc Limited (HZL) through an Offer for Sale (OFS) beginning Wednesday, November 6. The floor price has been set at Rs 505 per share, a nearly 10% discount compared to the stock’s current market price. The sale, which could generate around Rs 5,900 crore, is part of a strategic disinvestment initiative.

Two-Day Offer for Sale Schedule

The OFS will be conducted over two days, with non-retail investors getting the first opportunity to bid on November 6. Retail investors will have an exclusive bidding window on Thursday, November 7. The government is offering approximately 5.28 crore shares, representing a 1.25% stake, with the option for an additional 1.25% stake to accommodate oversubscription if there is high demand.

Structure and Purpose of the Stake Sale

According to Tuhin Kanta Pandey, Secretary of the Department of Investment and Public Asset Management (DIPAM), the sale will open first for institutional investors, with retail investors invited to bid on the second day. This OFS is designed not only to meet the government’s disinvestment targets but also to gradually reduce its remaining stake in HZL over time.

Hindustan Zinc: A Leader in Metal Production

Hindustan Zinc, part of the Vedanta Group, is a global leader in zinc, lead, and silver production, with a focus on sustainable mining practices. The Udaipur-based company operates extensive mining and smelting facilities and is known for its emphasis on resource conservation. Currently, the government holds a 29.54% stake in HZL, while Vedanta has maintained majority ownership since the company's privatization in 2002-2003.

Legal Context and Future of Disinvestment

In 2021, a court ruling restricted Vedanta from acquiring the government's remaining shares in HZL. However, the Supreme Court later approved the government’s plan to sell its stake through public offers. This sale marks one of several planned divestments, allowing the government to gradually exit its holdings in HZL over the next few years.

Stock Market Impact

On the Bombay Stock Exchange (BSE), shares of Hindustan Zinc closed at Rs 559.45 on Tuesday, a 2.99% increase from the previous day’s close, reflecting positive market response ahead of the government’s stake sale. The government’s 2.5% stake sale in Hindustan Zinc aligns with its disinvestment goals while providing investors a discounted entry into a key player in metal production. As the OFS unfolds, investors.