OFS: Offer For Sale route

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OFS (Offer for Sale) serves the same purpose as traditional mechanism of Follow-On Public Offer (FPOs) but it enables promoters to dilute their holdings in listed companies in a transparent manner with a wider participation through exchange based bidding platform (thus Involves least amount of paper work since it is a system based bidding platform, less time consuming due to automation & process involved, minimum spread between application & allotment of shares and is Cost-effective as well as convenient).

The OFS route was introduced by Sebi in 2012 and allows the companies to sell shares in a simplified process on the stock market platform through a one-day bidding. OFS issues are relatively much easier as compared to other conventional issues like FPOs (folllow on public offer). Huge cost is involved in the conventional routes and at the same time they are time-consuming also.

In February, the Securities and Exchange Board of India (Sebi) created two new mechanisms to sell stake : Institutional Placement Programme (IPP) and OFS , to meet the guidelines of 25 per cent minimum public shareholding in private firms and 10 per cent 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). In IPP route, shares can be sold to only institutional investor while In the OFS route, shares can be sold to institutional as well as retail investors.

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