IOB shares fall 4% as govt to offload 3% stake via OFS

IOB shares fall 4% as govt to offload 3% stake via OFS

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26 Aug, 2025 12:21

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Shares of Indian Overseas Bank (IOB) fell 4% to Rs 35.01 apiece on December 17 a day after government said it will sell up to 3% stake in the state-owned bank through an Offer For Sale (OFS) at floor price of Rs 34 per share.

The floor price represents a discount of 7% to Tuesday's close of Rs 36.6.

At the current market price, the government would be able to garner about Rs 2,000 crore by offloading up to 3% stake in the bank.

As of September 30, the government held nearly 95% stake, or more than 18 billion shares of the lender, as per data on the website of the National Stock Exchange.

This is in line with the Securities Contract (Regulation) Rules issued by the Securities and Exchange Board of India, which mandate that all listed companies, including those in the public sector, must have a minimum public shareholding of 25%.

Capital market regulator Sebi has given forbearance to CPSEs and public sector financial institutions till August 2026.

The other three lenders where the government stake exceeds the minimum public shareholding threshold are Punjab & Sind Bank (93.9%), UCO Bank (91%), and Central Bank of India (89.3%).

Earlier this month, the government had also opened an offer for sale of up to 6% stake in Bank of Maharashtra.

So far in 2025, shares of IOB fell 31% as against Nifty PSU Bank's nearly 27% rise.

The government proposes to sell up to 38.51 crore (38,51,31,796) shares or 2% base offer size with an option to additionally sell 19.25 crore (19,25,65,898) shares, representing 1% of the total issued and paid up equity share capital of the bank, IOB said in a regulatory filing.

"Offer for Sale in Indian Overseas Bank (IOB) opens tomorrow for Non-Retail investors. Retail investors can bid on Thursday. Government offers to disinvest 2% equity in the bank with an additional 1% as a green shoe option," Department of Investment and Public Asset Management (DIPAM) Secretary Arunish Chawla said in a post on X platform on December 16.

The government currently holds a 94.61% stake in the Chennai-based bank.

Additionally, the bank said, 1,50,000 shares of the bank (equivalent to 0.001 per cent of the total issued and paid up equity share capital of the Bank) may be offered to eligible employees in accordance with the terms and conditions provided in the OFS Guidelines, subject to approval from the competent authority.

The eligible employees may apply for shares amounting up to Rs 500,000, it added.