HDFC Life Insurance Company shares tanked more than 5 percent in morning on Tuesday as the offer for sale by joint venture partner opened for subscription today.
The stock was quoting at Rs 374.90, down Rs 14.90, or 3.82 percent on the BSE, at 10:13 hours IST.
The company announced on Monday that Standard Life (Mauritius Holdings) 2006 Limited, the joint venture partner, would sell its up to 7 crore equity shares (representing 3.47 percent of the total issued and paid-up equity) on March 12 and March 13.
The co-promoter also has an option to additionally sell up to 2.95 crore equity shares (representing 1.46 percent) in case of oversubscription of issue.
The offer for sale issue will open for subscription for non-retail investors on March 12 and for retail as well as non-retail on March 13, and will be conducted through a separate, designated window of BSE and National Stock Exchange of India.
The floor price for the sale is fixed at Rs 357.50, which is 8.3 percent discount to Monday's closing price.
Promoter HDFC held 51.48 percent stake in HDFC Life and the rest 29.23 percent is held by its joint venture partner Standard Life (Mauritius Holdings) 2006 Limited, as per the shareholding pattern of December 2018.
After the offer for sale, Standard Life's shareholding will be reduced to 24.3 percent if both offer for sale and additional stake sale took place as per plan.
A spokesperson of HDFC Life said, "We have noted the disclosure published by Standard Life Aberdeen (SLA) about their intent to sell 4.93 percent of the total shares outstanding as on date through offer for sale (OFS) mechanism. In our opinion, a sell down of 4.93 percent would help the company increase it's public float to 24.2 percent which is a step closer to IT achieving minimum public shareholding (MPS) prescribed by SEBI."
The SEBI Listing Regulations mandates all listed companies to achieve MPS of 25 percent within 3 years of listing.
"The above sale is a secondary offer and will not impact the capital position of the company," the spokesperson said.