Bank of Maharashtra OFS: Govt to exercise green shoe option post 'overwhelming response' on Day 1; retail investors to bid today

What is a green shoe option?

In an OFS, a green shoe option is a mechanism that allows the seller (usually the promoter or large shareholder) to sell additional shares beyond the originally announced quantity if investor demand is strong.

BoM OFS details

The OFS of BoM opened for subscription earlier on Tuesday for non-retail investors at a floor price of ₹54 per share.

On the first day, it got subscribed over 400% of the base size of 38.46 crore shares, triggering the exercise of the green shoe option of an additional 1%.

The issue was subscribed 4.07 times the base size, reflecting strong market confidence. Given the oversubscription, the government has exercised the green shoe option in full, taking the total divestment to 6 per cent of BoM’s paid-up capital, an official statement said.

This will ensure that BoM achieves the minimum public shareholding (MPS) norms, it said.

"The offer for sale in the Bank of Maharashtra received an overwhelming response in the markets today. The issue was subscribed to 400 per cent of the base size. The government has decided to exercise the green shoe option," Department of Investment and Public Asset Management (DIPAM) Secretary Arunish Chawla said in a post on X.

"Retail investors get to bid tomorrow on 3rd December 2025. Congratulations to the staff and leadership at the Bank of Maharashtra for outstanding financial performance over the last few years. Keep it going..." Chawla said.

The government encourages eligible investors to participate in the offer and partake in the value creation of the public assets, the statement said.

At the floor price the government would mop up about ₹2,492 crore by divesting its 6% stake in the state-owned lender.

"The Offer for Sale of a 5 per cent government stake, along with a 1 per cent green shoe option, received an impressive 407 per cent bids in the non-retail segment, reflecting strong investor confidence in the public sector banks and the robustness of the Indian banking sector," Financial Services Secretary M Nagaraju said in a post on X.

The floor price for the Bank of Maharashtra OFS has been set at ₹54 per share, reflecting a 6.34% discount from its Monday's closing price of ₹57.66 apiece on the BSE.

The base offer comprises 38.46 crore shares, representing 5% of the paid-up equity share capital of the bank, with an additional 7.69 crore shares, or a 1% stake, available under the green shoe option, taking the total to over 46.14 crore shares, or 6% of the stake in the lender.

The government currently holds a 79.60% stake in the Pune-based bank. With the stake dilution, the bank would be able to meet the MPS norm of 25%, as the government stake will come down below 75%.

This is in line with the Securities Contract (Regulation) Rules issued by the Securities and Exchange Board of India, which mandate that all listed companies, including those in the public sector, must have a minimum public shareholding of 25%.

Capital market regulator SEBI has given forbearance to CPSEs and public sector financial institutions till August 2026.

The other four lenders where the government's stake is more than the minimum public shareholding threshold are Indian Overseas Bank at 94.6%, Punjab & Sind Bank at 93.9%, UCO Bank at 91%, and Central Bank of India at 89.3%.