The government is looking to raise around ₹5000 crore by divesting up to 15% stake in state-owned Hindustan Aeronautics Limited (HAL) and the ‘offer of sale’ is being executed on Thursday and Friday.
HAL said in a stock filing with the exchanges early this week that the government would sell 33.43 million shares of face value of ₹10 each, representing 10% of the total paid-up equity share capital of the company to institutional and retail investors on August 27 and 28. In case of over subscription, a further 5% stake or 16.71 million shares would be offered. The floor price for the offer was fixed at ₹1,001 per share.
“Offer for Sale of 15% Govt shares in HAL got enthusiastic response on day one and was subscribed 1.60 times by non- retail investors. Government has decided to exercise the green shoe option. Retail investors get chance to bid on August 28 with a discount of 5% on the cut off price,” Secretary, Department of Investment and Public Asset Management, said on Twitter on Thursday.
In February, the government set an ambitious disinvestment target of ₹2.1 lakh crore for 2020-21 and since then the economy has been further hit by the COVID-19 pandemic.
The government currently holds 89.97% stake in HAL after selling a 10% stake through an Initial Public Offering (IPO) in 2018 that raised around ₹4,229 crore. HAL is the only aircraft manufacturer in the country and assembles and builds a range of military helicopters and aircraft. It currently has several deals and products in the pipeline on offer for the armed forces.
A deal for 83 Light Combat Aircraft (LCA)-MK1A, estimated to cost around ₹39,000 crore, is expected to be concluded in a couple of months. HAL has also designed and developed the Light Combat Helicopter (LCH), which is now in limited series production and the Light Utility Helicopter (LUH), which is in advanced stage of development.
Early this month, the Defence Acquisition Council approved 106 HTT-40 Basic Trainer Aircraft (BTA) under development by HAL for the Indian Air Force. The certification process for the HTT-40 prototypes is under way.
However, HAL has, from time to time, faced criticism for development and production delays.
