With the revival in the stock market, the companies are cosying up to a new and simple route of stake dilution, Offer for Sale (OFS), and seven firms have already hit the market to sell shares through this route.
The OFS route was introduced by Sebi early this year that allows the companies to sell shares in a simplified process on the stock market platform through a one-day bidding.
Together, a total of seven companies have used the method to sell stake in the past seven months, with the largest being the Rs 12,666-crore issue by state-run energy major ONGC in March this year.
Other companies that tapped the route include Wipro, Jaiprakash Power Ventures, D B Corporation, Muthoot Capital, Adani Power and Sical Logistics.
Except Wipro, all other issues were fully subscribed. The route was introduced by Sebi to help the companies meet the 25% minimum public shareholding, for which the deadline ends next year.
"OFS issues are relatively much easier as compared to other conventional issues like FPOs. Huge cost is involved in the conventional routes and at the same time they are time-consuming also," Anil Rego, Founder & CEO, Right Horizons said.
"OFS route can become more popular if stock market continue with its uptrend in short-term," he said.
In February, the Securities and Exchange Board of India (Sebi) created two new routes for raising public money and diluting promoter shareholding to meet the minimum public shareholding norms before the deadline.
IPPs and OFSs are two recent avenues made available to the promoters to help them dilute their stake and meet the guidelines of 25% minimum public shareholding in private firms and 10% in PSUs.
These are two fast-track stake sale programmes available for share sale through auction method, as against the long-drawn processes involved in traditional methods like Follow-on Public Offers (FPOs).
Only, real estate company Godrej Properties has used the IPP method for share sale till now.
The 30-share bellwether index, the BSE Sensex, has gained over 20% so far this year.