Tata Comm tumbles as OFS begins

Tata Communications slumped 4.68% to Rs 1236.60 after the offer for sale (OFS) opened for non-retail investors today, 16 March 2021.

Through the OFS, the Government of India proposes to sell up to 2,85,00,000 equity shares (representing 10% stake), with an option to sell an additional 6.12% stake or 1,74,46,885 equity shares in case of oversubscription.

The floor price for the OFS is Rs 1161 per equity share, a 10.51% discount to Tata Comm's closing price of Rs 1297.30 on Monday, 15 March 2021.

The total OFS size (base size + green shoe) stands at 4,59,46,885 shares, representing 16.12% of outstanding equity shares of the company, aggregating to Rs 5,334.43 crore.

The Government of India held 26.12% stake in Tata Communications as of 31 December 2020.

The OFS opened on Tuesday (16 March 2021) for non-retail investors, while both retail as well as non-retail investors will be able to subscribe on Wednesday (17 March 2021). A total of 10% of the total offer size is reserved for retail investors.

As on 12:50 IST, the OFS received subscription for 30,39,965 shares. It was subscribed 11.85% on the base non-retail offer size of 2,56,50,000 shares and 7.35% on the total non-retail total offer size (base size+green shoe) of 4,13,52,196 shares.

Public sector VSNL was privatised in the year 2002 by disinvesting 25% shareholding along with transfer of management control to the strategic partner, Panatone Finvest. Following the strategic disinvestment, the name of the company was changed to Tata Communications.

Panatone Finvest held 34.80% stake in Tata Communications (TCL) as on 31 December 2020.

On Friday (12 March 2021), Tata Communications announced the signing of amendment agreement between Government of India, Panatone Finvest, Tata Sons and the company for sale of the entire shareholding in the company by the Government of India.

Immediately after the OFS, the government shall sell the remaining equity shares held by it in the company to Panatone. Upon completion of aforesaid transactions, the government will cease to be a shareholder of the company.

Tata Communications is an Indian telecommunications company. On a consolidated basis, the company posted 428.1% jump in net profit to Rs 309.15 crore on a 0.1% decline in net sales to Rs 4,222.83 crore in Q3 FY21 over Q3 FY20.

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