Tata Communications shares dip 7% as govt to sell stake at discount through OFS

The share price of Tata Communications fell 7 percent on Tuesday as the government is selling its stake in the company at a discount to the current prices.

The offer for sale to sell the government's stake in the firm opened for non-retail investors on Tuesday. It will open for retail investors on Wednesday.

The government on Monday said it will sell up to a 16.12 percent stake in Tata Communications Ltd. through an offer for sale starting today.

The government holds a 26.12 percent stake in the company. The floor price has been set at Rs 1,161, a 9.8 percent discount to Monday's closing price and the sale of a 16.12 percent stake could fetch the government around Rs 5,334 crore.

The stock fell as much as 7 percent to the day's low of Rs 1,206.30 per share on the BSE.

The government will sell 2.85 crore shares or 10 percent stake held in erstwhile VSNL, with an option to sell an additional 1.74 crore shares or 6.12 percent stake as a greenshoe option.

"The President of India, acting through and represented by the Department of Telecommunications, Ministry of Communications, Government of India, is one of the promoters of Tata Communications Ltd (the "Seller"). The Seller proposes to sell up to 2,85,00,000 Equity Shares of Tata Communications Ltd , representing 10 percent of the total issued and paid up equity share capital of the company...on March 16, 2021 for non-retail investors only," the government said in the notice for OFS.

The government has reserved a minimum of 25 percent of the offer shares for mutual funds and insurance companies subject to valid bids and 10 percent for retail investors. As per the shareholding pattern of TCL, the promoters hold 74.99 percent of the company. Of this, the Government of India holds 26.12 percent stake while Panatone Finvest holds 34.80 percent and Tata Sons holds 14.07 percent. The remaining 25.01 percent is with the public.

So far this fiscal, the government has mopped up Rs 21,302 crore from CPSE disinvestments. The revised disinvestment target for this financial year has been set at Rs 32,000 crore, substantially lower than the budgeted Rs 2.10 lakh crore.