The Government of India has launched an Offer for Sale (OFS) in Central Bank of India, aiming to raise up to Rs 2,244.8 crore through the stake sale.
The OFS will open for non-retail investors on May 22, while retail investors can bid on May 25. The government, which is part of the bank’s promoter group, has set the floor price at Rs 31 per share, reflecting a discount of around 9.4% to the last closing price of Rs 33.9.
Under the issue structure, the base offer comprises 36.21 crore shares worth Rs 1,122.4 crore at the floor price, translating into a 4% equity sale. The government also has a greenshoe option for an additional 36.21 crore shares (another 4%), taking the total offer size to 72.41 crore shares worth Rs 2,244.8 crore.
In an Offer for Sale (OFS), a greenshoe option is a provision that allows the seller (or promoter) to offload additional shares in case of strong investor demand. It acts as a price stabilisation mechanism to prevent extreme volatility.
Of the total offer, 10% has been reserved for retail investors, while mutual funds and insurance companies have a 25% reservation.
At the end of the March quarter, the government held an 89.27% stake in Central Bank of India, according to stock exchange data, while public shareholders owned the remaining 10.73%. Retail investors, defined as those holding shares worth up to Rs 2 lakh, held a 3.42% stake in the lender.
To comply with minimum public shareholding (MPS) norms, the government will need to divest another 14.27% stake in the bank.
Additionally, up to 75 lakh equity shares may be offered to eligible employees of the bank under the employee reservation portion of the OFS, subject to the necessary approvals. In line with OFS guidelines, eligible employees can apply for shares worth up to Rs 5 lakh.
Last month, Central Bank of India reported a 30% decline in fourth-quarter net profit to Rs 724.4 crore from Rs 1,033.6 crore a year ago. However, net interest income (NII) rose 17.8% year-on-year to Rs 4,002 crore.
The bank’s asset quality remained broadly stable during the quarter. Gross non-performing assets (NPA) improved marginally to 2.67% from 2.7% in the previous quarter, while net NPA edged up sequentially to 0.49% from 0.45%.
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