Centre to sell 2.5% stake in Hindustan Zinc at Rs 505, will raise Rs 5,900 cr

The Central government announced on Tuesday its plan to sell up to 2.5% stake in Hindustan Zinc through an offer for sale (OFS), starting on Wednesday, November 6. The floor price for the sale is set at Rs 505 per share, representing a discount of nearly 10% to the current market price. The Offer for Sale (OFS) in Hindustan Zinc Limited (HZL) will open tomorrow for non-retail investors. Retail investors can bid on Thursday, 7th November.

The OFS will involve the sale of approximately 5.28 crore shares, equivalent to 1.25% of equity, with an additional option for oversubscription of 1.25% equity. The government stands to generate disinvestment revenue of approximately Rs 5,900 crore through the sale.

Non-retail investors can participate in the offer starting on November 6, with the option to carry forward un-allocated bids to the following day, November 7. Retail investors will have the opportunity to place their bids exclusively on November 7, as per OFS regulations restricting participation to retail investors and employees on that day.

"Offer for sale in Hindustan Zinc Limited (HZL) opens tomorrow (Wednesday) for non-retail investors. Retail investors can bid on Thursday, 7th November. Government will divest 1.25 per cent equity with an additional 1.25 per cent as greenshoe option," Department of Investment and Public Asset Management (DIPAM) Secretary Tuhin Kanta Pandey said in a post on X.

Hindustan Zinc, a subsidiary of Vedanta Group led by mining tycoon Anil Agarwal, is a major player in the global production of zinc, lead, and silver. Based in Udaipur, the company boasts a widespread presence in mines and smelters, emphasizing sustainable mining methods, resource preservation, and upholding its top spot in metal manufacturing.

The government currently holds a 29.54% stake in the zinc-lead miner operated by Vedanta. Exiting this investment will be a gradual process, as the government must identify suitable buyers over the course of several years.

Vedanta acquired the majority stake in the miner during its privatization in 2002-2003, with the remaining stake designated as public holding. Following a court ruling in 2021 preventing Vedanta from acquiring the government's residual stake, the Supreme Court has granted permission for the government to divest its stake through public offers.

On the BSE, HZL shares ended at Rs 559.45, marking a 2.99% increase from the previous closing price.