Tata Communication intends to divest the government’s shareholding in the company by announcing Offer for sale (OFS) that was earlier known as VSNL and it would be open for institutional investors from today. However, the government would sell its 10 percent stake, with an option to sell an additional 6.12 percent stake.

However, the floor price has been set at Rs.1,161 and the sale of 16.12 percent stake could fetch the government about Rs.5,334 crore. The offer would be open for retail investors from March 17, while the holds about 26.12 percent stake in the organization.

Commenting on the OFS, Tata Communication states, "As an initial step, the government will sell up to 4,59,46,885 equity shares forming 16.12 percent equity shareholding of the company through an OFS through the stock exchange mechanism. Immediately after the OFS, the government shall sell the remaining equity shares held by it in the company to Panatone.”

Panatone Finvest is an investment wing of Tata Sons. The rate of the stakes sold to Panatone would be decided based on the price and number of shares sold in the OFS.

Shares of Tata Communications, earlier state-owned VSNL, were down seven percent at Rs.1,206 on the BSE in intra-day trade on Tuesday as offer for sale (OFS) to divest the government holding in the company opened today for institutional investors.

Furthermore, the government is expected to sell its 10 percent stake, with an option to sell an additional 6.12 percent stake in Tata Communication. As of December 31, 2020, the government had held a 26.12 percent stake in telecom alternative carriers company through the President of India, says the shareholding pattern data.

The government, Panatone, Tata Sons and the company have entered into an Amendment Agreement with regard to amending the Shareholders’ Agreement dated February 13, 2002 which was entered into at the time of disinvestment by the government in 2002 between inter alia, the government and Panatone and to record the terms and conditions for the transfer of the agreed percentage of shares of the company held by the government to Panatone, the company said.

During the pandemic, the stock of Tata Communications has outperformed the market by zooming 387 percent as compared to a 62 percent rise in the S&P BSE Sensex. The stock hit an all-time high of Rs 1,365 on March 8, 2021.