How to participate in the Vedant Fashions OFS?

The Ravi Modi Family Trust has made an offer for sale of shares of Vedant Fashions, the company that owns the retail ethnic brand wear, Manyavar. 

OFS of Vedant Fashions

Here are the highlights of the offer for sale being made by the Ravi Modi Family Trust.

•    The OFS will be open on the exchange platform for a period of 2 days i.e., 18th May 2023 and 19th May 2023. The OFS will be open for the qualified institutional buyers (QIBs) on the 18th of May and for the retail investors on the 19th of May.

•    Within the non-institutional segment, investors either can apply in the retail category i.e., Rs2 lakhs or in the non-retail category i.e., above Rs2 lakhs.

•    The floor price of the offer for sale has been set at Rs1,161, which is below the market price of the stock. That is likely to make the OFS attractive for investors looking at an exit from Vedant Fashions.

•    The OFS will have two components viz. the base component and the oversubscription component. The base component of the OFS comprises of 1,69,94,600 shares which at the floor price of Rs1,161 would be worth Rs1,973 crore.

•    The other oversubscription component of the OFS comprises of 69,87,824 shares, which at the floor price of Rs1,161 would be worth Rs811 crore. Assuming the sellers get to retain the full oversubscription too, the total size of the OFS would be Rs2,784 crore.

•    The base OFS component represents 7% of the paid capital of the company while the oversubscription portion represents 2.88% of the paid up capital of the company. The total OFS would be equivalent to 9.88% of the paid up capital of the company.

How to place bids for the OFS for retail investors?

The window for non-retail investors will be open on 18-May and the window for retail investors will be open on 19-May, which is the T-day and the T+1 day. While placing their bids on T-day, the non-institutional investors can indicate their willingness to carry forward their orders to the unallocated bids on the second day, to the extent the retail portion is undersubscribed. Only retail investors can place bid on 19-May and non-retail investors will be eligible for additional allotment only if the retail portion gets undersubscribed.

The allocation will be made at the floor price of Rs1,161 or higher only and will be allocated on price priority basis at multiple clearing prices in according to SEBI OFS guidelines. Indicative price will only be displayed for the non-retail category and not for the retail category. Only SEBI registered mutual funds and IRDAI registered insurance companies can be technically allotted shares constituting more than 25% of the offer shares.

Out of the total OFS, 10% is reserved for the retail investors subject to receipt of valid bids. Based on the lowest bids received on the first day, the company will identify a cut-off price for the retail investors to bid at. Bidding at cut-off is the same as in any IPO in the sense that you are assumed to have invested at the discovered price so the chances of bid rejection are very low. 

Additional features of the OFS

Axis Capital and Kotak Securities will act as the brokers to the selling shareholders (Ravi Modi Family Trust). The seller reserves the right to not go ahead with the offer for sale at any time prior to the opening of the issue. In such cases, a second offer is not possible for a cooling period of 10 days. The seller can also withdraw the offer if the aggregate bids from non-retail investors received on the first day at eligible prices is not sufficient. While institutional investors need not up full deposit, all other investors have to do the same. All settlement shall take place of T+2 day.