OFS (Offer for Sale) for fund raising

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OFS (Offer for Sale)

 In previous blogs we have seen the concepts of IPO, FPO, and QIP Now we will see the OFS (Offer for sale). In previous years Promoters used to have more than 95-98 % shares but Now as per SEBI’s Guideline promoters can hold a maximum of up to 75% before this promoter can able to manipulate the share prices as there is less liquidity in the market and can have full control on share prices. If any of the promoters have more than 75% stake in that market, then by using this OFS facility can able to dissolve their stake holdings. Institutional investors with other big investors have a 25 % Quota, and 10% is for retail investors, retail investors can invest but not more than 2 lakh rupees individually . promoters can bring this OFS or the people having more than 10 % holding can bring this OFS to market if promoters are bringing OFS then they can’t participate in this OFS but any other shareholder than promoters are bringing OFS then promoters can participate in this OFS

We have seen in the stock market unless and until you are not booking your profit you can’t able to earn from the stock market. for this purpose, people having more holdings can bring OFS to the market. they have to decide the floor price of the stock and with terms and conditions, we have to submit details like the purpose of OFS and limitations and rules and regulations from your side to SEBI for further procedure. to control the price biding floor price declaration is very important. As we are observing quarterly reports. of companies, if we wish to issue OFS that company needs to be in the top 200 then, and then only we can or promoters can able to issue OFS in the secondary market. when promoters are issuing OFS in the market then 12 weeks before the OFS and 12 Weeks after OFS we can’t able to bring any other OFS in the market this period is called as the cooling period of the market after this period we or promoter can again introduce OFS to the market as like this we or promoters can able to raise money from the secondary market in a very short time. once we get a sanction from SEBI we can introduce it to the market in only 24 hrs. we have to bring an OFS of a minimum of 25 Cr.

When this OFS gets issued in the open market first day is allocated to the Institutional investors then after that for retail investors. during this OFS share will get normally traded in the secondary market if OFS has a good response from the OFS  market then we can say that company is doing good in their business and you can get benefits from that event. you can apply for this OFS through your brokers. and share will get allotted on the basis of biding and first come first serve basis. over subscription and under subscription can tell you about the financial condition of any company and retailers will get an offer of 5 % discount on floor price this is the actual benefit of investment in OFS 

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