Is the Government's Stake Sale in Bank of Maharashtra Oversubscribed by 4.07 Times?
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Synopsis
The government's recent stake sale in Bank of Maharashtra has drawn significant interest, oversubscribing by 4.07 times on its opening day. This article explores the implications of this event and its impact on public shareholding norms.
Key Takeaways
- The government's stake sale in Bank of Maharashtra was oversubscribed by 4.07 times.
- Robust demand led to the full exercise of the green-shoe option.
- The total divestment now stands at 6% of the bank's paid-up capital.
- The Offer for Sale opens for retail investors on December 3.
- Public sector banks are experiencing significant profit growth.
New Delhi, Dec 2 (NationPress) The government's Offer for Sale (OFS) of its stake in Bank of Maharashtra experienced an oversubscription of 4.07 times on the first day of bidding aimed at non-retail investors on Tuesday, as stated in an official announcement.
Robust interest from non-retail investors prompted the government to activate the additional one percent green-shoe allocation after the initial five percent offer was significantly oversubscribed.
According to the Finance Ministry's statement, "The issue was subscribed 4.07 times the base size, showcasing strong market confidence. With this oversubscription, the government has fully exercised the green-shoe option, raising the total divestment to 6 percent of BoM’s paid-up capital. This step will ensure that BoM meets the Minimum Public Shareholding (MPS) requirements."
The Offer for Sale will commence for retail investors and employees of Bank of Maharashtra on December 3, the statement added.
The government encourages eligible investors to engage in the offer and contribute to the value generation of public assets.
In a social media post, the Secretary of the Department of Investment and Public Asset Management congratulated the staff and leadership at Bank of Maharashtra for their exceptional financial performance in recent years, urging them to maintain this momentum.
On Monday, the Centre revealed its plan to divest up to 6 percent of its stake in Bank of Maharashtra (BoM), which includes 5 percent equity and an additional 1 percent as a green-shoe option, all at a floor price of Rs 54 per share.
Of the overall offer, 10 percent has been allocated for retail investors, with the rest designated for non-retail participants.
A report from CareEdge Ratings indicated that public sector banks (PSBs) saw a 4.7 percent year-on-year increase in net profit, amounting to Rs 0.50 lakh crore in Q2FY26, attributed to fee income, treasury gains, and credit growth in the retail and MSME sectors.
Point of View
It is essential to recognize the implications of the government's stake sale in Bank of Maharashtra. This significant oversubscription indicates strong market confidence and reflects the bank's robust performance. Such moves not only affect the bank's operational dynamics but also illustrate broader trends in public sector banking and investor sentiment in India. NationPress remains committed to providing insightful coverage on developments that shape our economy.
NationPress
04/12/2025
Frequently Asked Questions
What does it mean for the government's stake sale to be oversubscribed?
An oversubscription indicates that the demand for shares exceeded the initial offer, reflecting investor confidence and interest in the asset.
What is the green-shoe option?
The green-shoe option allows issuers to sell additional shares if there is high demand, helping to stabilize share prices and meet investor interest.
When can retail investors participate in the Offer for Sale?
Retail investors and Bank of Maharashtra employees can participate starting from December 3.
What are Minimum Public Shareholding norms?
Minimum Public Shareholding norms require a certain percentage of shares to be held by public investors to ensure broad ownership and market liquidity.
How did public sector banks perform recently?
Public sector banks recorded a 4.7% year-on-year increase in net profit, driven by fee income, treasury gains, and growth in retail and MSME lending.
