Government to sell 8% stake in HUDCO

[ecis2016.org] The sale will help the government generate nearly Rs 721 crores

The government will sell 8% stake in HUDCO through an offer for sale (OFS) on July 27, 2021. The sale will help the government generate nearly Rs 721 crores. The floor price for the offer has been fixed at Rs 45 per equity share – this is at a 5% discount to HUDCO stock’s closing price on July 26, 2021.

You are reading: Government to sell 8% stake in HUDCO

The centre’s offer to sell its 110 million shares or 5.5% stake in HUDCO would open for non-retail investors on July 27, 2021. However, the sale of the remaining 2.5% share holding for retail investors would take place on July 28, 2021. On day one, HUDCO aims to sell up to 11,01,04,500 equity shares of face value of Rs 10 each. On day two, the public enterprise may sell 5,00,47,500 equity shares of the company.

After the sale, the government shareholding in the company would reduce to 81.81%, if it exercises the green-shoe option and offloads the entire 8% in the public sector undertaking (PSU). The OFS will happen during the trading hours on a separate window of the stock exchanges on both days from 9:15 am to 3:30 pm.

After NMDC, this is the second time the government is offloading its stake in a PSU through an offer for sale in the current financial year.

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All you need to know about Housing and Urban Development Corporation (HUDCO)

Incorporated as the Housing and Urban Development Finance Corporation in April 1970, the HUDCO is notified as a public financial institution

Among the several bodies that enable the government to meet the housing needs of the marginalised sections of society in India, is the Housing and Urban Development Corporation (HUDCO). Incorporated as the Housing and Urban Development Finance Corporation, in April 1970, the New Delhi-headquartered HUDCO is notified as a public financial institution.

Key objectives of the HUDCO

The main objects of the HUDCO are:

• To provide long-term finance for construction of houses for residential purposes, or finance or undertake housing and urban development programmes.
• To wholly or partly finance or undertake, the setting up of new or satellite towns.
• To subscribe to bonds/debentures issued by the state housing boards, development authorities, improvement trusts, etc., specifically for financing housing and urban development programmes.
• To use the money received from the government and other sources, as grants or otherwise, to finance and undertake housing and urban development programmes.
• To promote, assist, establish, collaborate and provide consultancy services for planning and designing of works related to housing and urban development in India and abroad.
• To finance or undertake the setting up of industrial enterprises of building material.
• To undertake venture capital funding in housing and urban development sectors, to facilitate innovations and invest in and/or subscribe to the shares/units, etc., of venture capital funds promoted by the government/government agencies.
• To set up mutual funds for the purpose of housing and urban development and/or invest in and/or subscribe to the units of mutual funds, promoted by the government/government agencies for this purpose.

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HUDCO loans

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The HUDCO provides loans for projects relating to water supply, roads and transport, power, emerging sectors, commercial infrastructure (shopping centres, market complexes, malls-cum-multiplexes, hotels and office buildings), social infrastructure, sewerage, drainage and solid waste management and smart cities. It also provides loans to central and state governments and agencies, for residential development. Till December 2020, the HUDCO had financed the construction work for 1,96,19,532 dwelling units meant primarily for the LIG, EWS, MIG and HIG categories.

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However, the funds are only meant for acquisition of land and development of plots, housing for EWS/LIG/MIG/HIG and other categories, staff rental housing, slum rehabilitation/ in-situ development/ slum upgradation, repairs of apex co-operative housing societies, etc. The HUDCO currently lends to state governments and their agencies after it stopped sanctioning new loans to private sector entities in March 2013.

HUDCO performance in numbers

Source: HUDCO

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