The Indian government has successfully reduced its ownership in state-owned Indian Overseas Bank (IOB) through a recent Offer for Sale (OFS). Following the completion of the share sale, the Centre's holding in the Chennai-based lender now stands at 92.44 per cent.
Details of the Offer for Sale
The stake dilution process was initiated on December 16. The government proposed to sell up to 38.51 crore shares, which represented a 2 per cent base offer. Additionally, it included a green-shoe option to sell a further 19.25 crore shares, equivalent to 1 per cent of the bank's total equity.
According to the regulatory filing made on Saturday, the government's stake prior to this sale was 94.61 per cent. The Department of Investment and Public Asset Management (DIPAM) reported robust demand, with bids received for more than 41 crore shares against the base offer of approximately 34.66 crore shares.
Partial Exercise of Green-Shoe Option
The strong response prompted the government to exercise the green-shoe option. However, this additional portion was only partially subscribed. Investors picked up shares representing just 0.17 per cent of the equity under this option.
With the OFS closing on December 18 and the partial exercise of the green-shoe option, the government's total stake was reduced by 2.17 percentage points. This brought its shareholding down from 94.61 per cent to the current level of 92.44 per cent.
Compliance with Sebi Regulations
This strategic divestment is a step towards complying with the Securities Contracts (Regulation) Rules mandated by the Securities and Exchange Board of India (Sebi). These rules require all listed companies, including public sector entities, to maintain a minimum public shareholding of 25 per cent.
It is important to note that Sebi has granted an extension to central public sector enterprises and public sector financial institutions. They now have time until August 2026 to meet this minimum public float requirement.
Other Public Sector Banks Above Threshold
IOB is not the only public sector bank where the government holds a significant majority stake. The shareholding remains above the threshold in several other lenders as well.
- Punjab & Sind Bank: Government holding at 93.9 per cent.
- UCO Bank: Government holding at 91 per cent.
- Central Bank of India: Government holding at 89.3 per cent.
The successful OFS for IOB represents a continued effort by the government to manage its assets and gradually increase public participation in state-owned enterprises, while working within the regulatory framework set by Sebi.
