What is OFS?
Offer for Sale (OFS) allows stakeholders of a company to sell their shareholdings in the company. An offer for sale of shares is a pretty new mechanism where the stock exchanges provide sellers with a separate one day window to sell their stake in a company. The Offer for Sale process is very much similar to sale of shares in secondary market. The difference being in market the buy / sell price changes continuously in OFS the entire transaction is done at a single price. This route is used by promoters to off load part of their shareholding in the company.
The government of India is making effective use of the Offer for Sale mechanism to offload its shareholding in top PSUs as part of its divestment initiative. Many top PSUs are coming up with OFS in the near future. All the major market participants who can place bids for such PSU OFS or participate in the OFS process include individual retail investors, mutual fund participants, foreign institutional investors (FIIs), insurance companies, corporates, qualified institutional bidders (QIBs), and HUFs.
So, all you retail investors, please note that OFS is one of the easiest ways in which you can buy shares of a listed company by bidding for them from the comforts of your living room sipping coffee. All you need is a trading account with a stock exchange member and a Demat account.
SEBI guidelines mandate listed companies to intimate the stock exchanges at least two days prior to placing OFS. The exchanges publish the OFS announcement on their website and make the information public. Thus, all you have to do as a retail investor is to keep an eye on the BSE/NSE websites and check for OFS announcements, especially those of PSUs. Further, most broking agencies notify their retail customers about the PSU OFS through email and SMS channels. Once you are aware of an OFS announcement, you have to simply login to your trading account with your broker, navigate to the relevant section pertaining to the OFS, and place your bid price and quantity of shares that you want to buy. The bid price cannot be lower than the floor price fixed by the company. Further, if you want to bid for just one share, you can, as long as you follow the mandated procedure. Based on the bid prices, the company allots the shares. Please contact your broker now or write to us at firstname.lastname@example.org
to let us know if you are interested in subscribing to a fresh issue of shares in a PSU OFS.