New Delhi [India], August 25 (ANI): The government's Offer for Sale (OFS) in Hindustan Copper Limited received a strong response from institutional investors on Tuesday, with the issue getting oversubscribed 3.41 times on the first day of bidding.

Department of Investment and Public Asset Management (DIPAM) Secretary said in a social media post that the government has decided to exercise the entire green shoe option following the strong institutional demand.

'Hindustan Copper Ltd. Offer for Sale (OFS) received an enthusiastic response from the institutional investors and was oversubscribed 3.41 times on Day One. The Government has decided to exercise the entire green shoe option,' the post said.

The OFS will now open for retail investors and employees on Wednesday.

An Offer for Sale (OFS) is a mechanism through which promoters of a listed company, including the government in the case of public sector enterprises, sell part of their shareholding through the stock exchange. The route enables promoters to reduce their stake in a transparent manner while providing institutional and retail investors an opportunity to participate in the share sale.

The government had earlier announced the sale of 3 per cent equity in Hindustan Copper through the OFS, with an option to sell an additional 3 per cent stake under the green shoe option in case of strong demand.

With the government deciding to exercise the entire green shoe option, the potential stake sale will rise to 6 per cent.

The green shoe option is a provision that allows the seller to retain the flexibility to sell additional shares over and above the base issue size if the offer receives strong demand from investors

The OFS has a floor price of Rs 514 per share, while 10 per cent of the offer is reserved for retail investors. An additional 25,000 shares have been reserved for eligible employees.

The stock closed at Rs 531.40 per share on the NSE, declining more than 7 per cent by closing on Tuesday. The floor price of Rs 514 is therefore below Tuesday's closing price, although the gap has narrowed significantly following the day's decline.

The government's decision to exercise the full green shoe option indicates that institutional demand was strong enough on the first day for the additional stake sale to be taken up. (ANI)