The government restarts its divestment program with an offer for sale of 6,60,02,035 shares of PFC. The OFS would happen on Monday the 27th of July. The floor price has been fixed at Rs 254 which is a discount of Rs 5.55 or 2.14% compared to the closing price of Rs 259.55 on the BSE and NSE.

There is a reservation of 20% for retail investors. This OFS has one unique feature which has been introduced after a lot of debate and discussion. Considering the fact that retail investors are not well equipped to determine the price at which allocation will happen in the OFS, it has been decided to allow them to bid at “CUT-OFF”. This cut-off price would be decided on the basis of the lowest price at which shares would be offered to investors in the non-retail category. The customary 5% discount to retail investors would be available.

The issue size at the floor price would be Rs 1676.45 crs. The six month high and low for the share has been Rs 313.50 and Rs 250. This means that the share is being sold virtually at the low of its six month price. It appears to be an attractive offering from the government and merits attention.

Incidentally this would be the first issue under new recent guidelines issued by SEBI for OFS. The announcement of the offer was made post closure of markets on Friday and the floor price announced on Saturday. This gave market players absolutely no chance to hammer the price of the stock. The weekly high low on the BSE is 270.50 and 256.

The offering is interesting without doubt and the success of this issue would embolden the government to come out with one or two such offerings every month and achieve its ambitious divestment target.