The government has announced plans to divest up to 8% of its stake in the Central Bank of India through an offer for sale (OFS), with a floor price set at Rs 31 per share. The divestment, which includes a 4% dilution through a green shoe option, is part of efforts to comply with regulatory requirements for public shareholding.
The government currently holds an 89.27% stake in the bank as of the end of March. The offer for sale will allocate about 10% of the shares for retail investors, while 0.1% of the total issued and paid-up equity share capital will be offered to employees. Non-retail investors were allowed to bid on Friday, with retail investors set to bid on Monday.
This move is aimed at reducing the government's holding to meet the Securities and Exchange Board of India's (SEBI) rule mandating a minimum of 25% public holding in listed companies. The bank's annual net profit has shown a 15.4% growth, reaching Rs 4,369 crore, while its gross advances have increased by 19% to Rs 3.45 lakh crore.
The divestment is seen as a strategic step to enhance the bank's market presence and align with regulatory norms. The market will closely watch the response from both retail and non-retail investors as the OFS progresses.
Background
The Central Bank of India's divestment plan is part of a broader government strategy to reduce its stake in public sector banks, ensuring compliance with SEBI regulations and potentially improving market liquidity. This move could also set a precedent for similar actions in other public sector entities.
Investors and market analysts will be keenly observing the outcome of the offer for sale, as it could influence future government divestment strategies and impact the bank's stock performance in the coming months.
