In a significant corporate development, Vedanta Ltd, the promoter of Hindustan Zinc Limited (HZL), has announced plans to divest a portion of its stake in the metals producer through an offer for sale (OFS) route. The company aims to sell up to 6.7 crore shares of HZL, which translates to approximately 1.6% of its total equity, with the objective of mopping up nearly Rs 4,600 crore in proceeds.
OFS Details and Pricing Strategy
On Tuesday, Vedanta formally informed the stock exchanges about its intention to offload the HZL stake. The OFS will be conducted at a floor price of Rs 685 per share, which represents a 5.8% discount compared to HZL's closing price of Rs 727 on the Bombay Stock Exchange (BSE) on the same day. This strategic pricing is designed to attract investor interest and ensure a successful sale.
Timeline and Investor Participation
The OFS programme is scheduled to commence on Wednesday, with the initial bidding window exclusively reserved for non-retail investors. Retail investors will have their opportunity to participate starting Thursday, following the non-retail phase. This staggered approach helps manage demand and ensures orderly market operations.
Base Offer and Green Shoe Option
According to Vedanta's disclosure to the exchanges, the base offer consists of 3.4 crore shares, equivalent to 0.8% of HZL's equity. Additionally, the promoters have retained the right to offer an extra 3.4 crore shares under the green shoe option if there is sufficient demand for the stock. This flexibility allows Vedanta to capitalize on market appetite and potentially increase the total stake sold.
Strategic Rationale Behind the Stake Sale
Vedanta has previously offloaded portions of its HZL stake twice in the past two years, and this latest move is part of a broader strategy to strengthen and deleverage its balance sheet. By optimizing its capital structure, the company aims to enhance financial stability and support future growth initiatives. The proceeds from the OFS will be utilized to reduce debt and improve overall corporate health.
Current and Post-OFS Shareholding
As of December 31, 2025, Vedanta held nearly 62% of HZL's equity, as per shareholding disclosures on the BSE. Upon successful completion of the OFS, including the potential exercise of the green shoe option, Vedanta's stake in HZL is expected to reduce to a little over 60%. This adjustment maintains its majority control while freeing up capital for other strategic purposes.
Brokerage and Market Implications
Citigroup Global Markets India has been appointed as the broker for this offer, overseeing the transaction process. The stake sale is closely watched by market participants, as it reflects Vedanta's ongoing efforts to streamline its portfolio and address financial considerations in a dynamic economic environment.
