Govt likely to sell Hindustan Zinc stake via offer-for-sale route

The government is likely to sell its residual stake in Hindustan Zinc (HZL) for an estimated Rs 20,000 crore through an Offer for Sale (OFS), and is in final stages of discussion with market regulator Securities and Exchange Board of India (Sebi) for changes in the OFS norms.

Currently, the OFS mechanism is open only to promoters of listed companies for diluting or offloading holdings. The top 100 companies by market capitalisation have been availing of this route to meet the minimum public shareholding norm.

The government holds 29.54 per cent stake in HZL and has already initiated the process of fresh valuation of the erstwhile PSU to push through the long pending stake sale in the current financial year.

"In HZL we are looking at OFS. Talks are on with Sebi for a change in OFS guidelines to allow non-promoters to dilute stake," a senior government official said.

The Finance Ministry is in discussion with Sebi to change the norms which will allow non-promoters as well to offload their stake through the OFS route, the official added. This will pave the way for the government to exit HZL.

HZL shares closed at Rs 166.40, up 2.24 per cent, on the Bombay Stock Exchange. With a market capitalisation of Rs 70,309 crore, the government's 29.54 per cent stake in HZL would fetch about Rs 20,770 crore.

The Cabinet had in January cleared the selling of the residual stake in HZL.

The Department of Disinvestment has already invited proposals from merchant bankers or chartered accountant firms with experience in handling valuation of companies.

HZL had paid-up capital of Rs 845 crore as on March 31, 2013.

The government sold majority stake in the erstwhile PSU to the Vedanta group during 2001-03. At present, London-listed Vedanta holds 64.92 per cent stake in HZL.

Last October, Vedanta shareholders approved increasing the offer to acquire the government's remaining stake in HZL. The Vedanta board is now empowered to make an offer of up to Rs 21,636.56 crore for the government's stake.

In the current financial year the government has budgeted to collect Rs 15,000 crore through selling residual stake in private companies, which includes HZL and Balco.