Central Bank of India Stock Prices Plummet 6% Following Opening of Offer for Sale at 8.6% Discount

Central Bank of India Shares Decline After Government Launches Offer for Sale

The Central Bank of India's stock price plummeted nearly 6 percent on Friday following the government's launch of an offer for sale (OFS) to divest up to 8 percent stake in the lender at a discount to the previous close. The stock dropped as much as 6.69 percent to an intraday low of Rs 31.65 per share on the National Stock Exchange (NSE), opening lower by 4.78 percent in early trade.

Key Details of the Offer for Sale

The OFS, aimed at offloading up to 8 percent stake including a 4 percent base offer and a 4 percent greenshoe option, was opened for institutional investors on Friday. Retail investors will be able to place bids on Monday. The floor price has been fixed at Rs 31 per share, which is about 8.6 percent lower than the closing price of Rs 33.91 on Thursday.

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Expected Divestment Proceeds and Impact on Government's Stake

At the full 8 percent divestment, the government is expected to raise about Rs 2,456 crore from the stake sale. Central Bank of India shares were also the top laggard in the Nifty PSU Bank index. The government currently holds 89.27 percent stake in the bank. If the greenshoe option is fully exercised, its holding will come down to 81.27 percent.

Meeting Minimum Public Shareholding Norms

The stake sale is part of the government's efforts to meet minimum public shareholding norms mandated by the Securities and Exchange Board of India, which require listed companies to maintain at least 25 percent public shareholding. In the current financial year, the government has already raised Rs 2,624 crore through OFS in Bank of Maharashtra and Rs 1,419 crore from Indian Overseas Bank.

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