An Offer for Sale is a simpler method wherein promoters in public companies can sell their shares and reduce their holdings in a transparent manner through the bidding platform for the Exchange. The OFS segment was earlier allowed only for the Promoters/Promoters’ Group Entities of listed Companies, to act as ‘Sellers’ to dilute/offload their holding to achieve minimum public shareholding of 25%. Now, however, the segment has been extended to non-promoters of eligible companies holding at least 10% of share capital of the company.
To make it easier for promoters of publicly listed companies to cut their holding and comply with the minimum public shareholding. The OFS Mechanism was first introduced in the market by SEBI in 2012. Offer for Sale mechanism is available to 200 top companies in terms of market capitalisation.
OFS Allocation, settlement& Timing.
- No allocation will be made in case order/bid is below floor price.
- Minimum of 25% of the shares offered shall be reserved for mutual funds and insurance companies, subject to allocation methodology
- No single bidder other than mutual funds and insurance companies shall be allocated more than 25% of the size of offer for sale.
- Settlement shall take place on trade for trade basis. For non-institutional orders/bids and for institutional orders with 100% margin, settlement shall take place on T+1 day. In case of orders/bids of institutional investors with no margin, settlement shall be as per the existing rules for secondary market.
- Client can place OFS order from 9.15 am to 2.45 pm
- Modification of orders in OFS is allowed.
- In case OFS order get rejected from the exchange for any reason, bid will not go through.
How to bid in OFS
If total bid value is not exceeding 2 lakh rupees then the investor can apply in retail category. In other cases, the investor has to apply in the HNI category.
To apply for OFS you simply have to Login – Click on IPO/OFS option – Select OFS – Apply
Sellers have to provide a floor price on T-2/T-1 day (T being day of OFS). The floor price is the price at and above which an investor can place their orders.
An investor can invest up to Rs 2 lakhs under retail category in one company's OFS.
In some OFS, retail investors may be offered a discount on the floor price, especially if it is an OFS of PSU companies.
You can invest/participate in OFS with the help of your HSL account. Customers can login to their trading accounts and place bids by following the below mentioned steps:
Login – Click on IPO/OFS option – Select OFS – Apply
NRI clients can apply through Relationship Manager or Central Dealing Desk.