The government will divest 10 per cent of its stake in public sector chopper-maker Hindustan Aeronautics Ltd (HAL) through a Rs 4,230-crore initial public offer (IPO) as part of the divestment process.
The company will also sell 10.20 per cent of its equity through an offer-for-sale route which will hit the market on March 16.
The firm, which gets over 91 per cent of its sales from the defence sector including the Coast Guard, has fixed a price band at Rs 1,215-1,240 per equity share for the offer. The sale is part of the government’s Rs 75,000-crore divestment process, which for the first time in many years, has already crossed the target.
The proceeds from the stake dilution is important as the government needs to meet the 3.5 per cent fiscal deficit target set for the year. As of end January the government had already used 113 per cent of the same.
The company, which made a profit of Rs 3,580 crore in the financial year 2016-17 on a revenue of over Rs 18,600 crore, is offering a discount of Rs 25 on offer price to retail individual bidders, and employees which have come in for at least 12 or the multiples of 12 shares. The IPO will see the company selling 34,107,525 equity shares of face value of Rs 10 through an offer for sale by the President, acting through the Department of Defence Production under the Defence Ministry.
The offer comprises a net offer of 33,438,750 equity shares and an employee reservation of up to 668,775 shares. The offer and net offer will constitute 10.20 per cent and 10 per cent, respectively, of the post-offer paid-up equity share capital of the Bengaluru-based HAL. The IPO, being managed by SBI Caps and Axis Capital, will see 50 per cent of the net offer available for qualified institutional buyers, of which 5 per cent is reserved for mutual funds.
Hindustan Aeronautics acting chairman VM Chamola said it has an order book of over Rs 68,000 crore, which covers the next three years and had a revenue of over Rs 5,300 crore in the first half of the current fiscal, which he attributed to the seasonal factors. The company, set up in 1940, produces over 27 types of light combat aircraft and helicopters and is the 39th largest aerospace company in the world.