IOB Share Price in Focus: Government to Trim Stake via OFS

Shares of Indian Overseas Bank Ltd declined ~1% on Thursday, December 18, following the government’s announcement of an Offer for Sale (OFS) to dilute a portion of its stake in the public sector lender. IOB share price opened at ₹34.15 and touched the day low of ₹33.80 at 11:20 AM

The OFS opened for non-retail investors on Wednesday and will be available for retail investors on Thursday, December 18.

Details of the Offer for Sale

The government intends to divest up to 2% of Indian Overseas Bank’s outstanding equity through the OFS, with an additional 1% offered via a greenshoe option.

The floor price for the OFS has been set at ₹34 per share, which represents a discount of about 4.4% to the stock’s closing price on Tuesday.

The OFS floor price is also significantly lower than the ₹40.57 issue price at which Indian Overseas Bank raised funds through a Qualified Institutional Placement (QIP) earlier this year, marking a discount of nearly 16%.

Recap of QIP Fundraise

In March, the bank raised ₹1,436 crore by issuing 35.41 crore shares to eligible institutional investors. Life Insurance Corporation of India (LIC) emerged as the largest subscriber, accounting for 34.8% of the QIP allocation, followed by IIFL Finance with nearly 14%. SBI Pension Fund and LIC Pension Fund each received about 7% of the issued shares.

Despite the proposed stake sale, the government continues to hold over 94% stake in Indian Overseas Bank as of the September quarter.

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