- What is all the fuss about OFS ?
OFS stands for Offer for Sale, similar to FPO’s (Follow on Public Offer). OFS is done by already listed companies on stock exchanges, enables promoter to dilute their holdings in listed companies in a transparent manner with a wider participation through exchange based bidding platform. Recently MMTS completed its OFS for Rs 60 where its Market price was Rs 204.
- Why do companies go for OFS ?
In June 2010, the Union ministry of finance had issued guidelines pertaining to minimum public shareholding for all listed corporates.To adhere Promoters have to sell at least 25% of their equity capital to meet the minimum public shareholding norm laid out by capital market regulator Securities and Exchange Board of India.
- What do you mean by floor price under OFS?
Floor price can be defined as minimum price to at which you can apply under OFS. Any order placed below the floor price will not be accepted. It is mandatory for the seller to disclose floor price.Eg Jet Airways came with a Floor Price of Rs 510/-
- Can Retail Investor participate in OFS?
Yes Retail Investor can participate in OFS with the help of their trading account. Retail Investor do need to have their DMAT account for shares to get credited into.
- Can retail investor trade under normal Equity segment in stocks which are eligible for Offer for Sale?
Yes, you can continue trading under normal Equity segment for stocks available under Offer for sale on the day of such offer. OFS has no effect on normal equity segment but stocks do gets volatile at times and few stocks are not tradeable also Like MMTC was locked in Lower Circuit when OFS came.
- Can I place Market and Limit orders under this facility of Offer for Sale?
You can place only Limit order under Offer for Sale facility as market order is not allowed.
- Where can Investor view the details of the company coming up with OFS?
Investor can view the details like name of the company, seller name, bidding date, period, floor price on exchange website.(Click on Link)
- Is there any additional charges applicable under OFS?
There are no additional charges to place your bids under OFS. Transaction charges, STT & other charges which are currently levied under equity segment would be applicable for OFS segment.
- How the shares are allocated under OFS & by when will I receive allotment?
Investors shall receive shares directly into their DEMAT account on allotment on T+2, where T is the day of issue.
- In case of non-allotment, by when will I receive my funds?
Funds collected from the bidders who have not been allocated shares shall be released on T+1, where T is the day of issue.
- What is the period of issue under OFS & duration during which I can place my bids?
The issue period under OFS shall not exceed one trading day. You can place your bids during normal trading hours i.e. from 9:15 am to 3:30 pm& as per the timelines defined by your broker.
- Can I modify/cancel my order under OFS?
Yes, you can modify/cancel your bids during the offer period. However, no modification or cancellation will be allowed during the last 30 minutes of the offer duration.
- Is there any restriction on number of bids from single buyer?
Under OFS, there is no restriction on number of bids from single buyer.
- What is the advantage of OFS over traditional Follow-On Public Offer?
No paper work required as Bid can be placed online either by Investor or broker on behalf of Investor.
Minimum spread between application & allotment of shares
Cost-effective and saves time.
- Is OFS Positive or Negative for Stock Market ?
OFS have negative effect on market sentiments if they come all together as they suck the market liquidity and investor who wants to apply for OFS to get liquidty sell exisitng shares which leads to correction in stocks. As per 30 May in next few weeks OFS worth Rs 13,500 will flood stock market.