SEBI has mandated that all listed companies – Private and Public –must offer a minimum of 25% of their shares to retail investors -An OFS usually occurs when the existing promoters, or major shareholders, decide to offer up a part of their shares for sale, to meet their Public Shareholding Norm.

An OFS is a quick route by which an investor can obtain shares in a top-listed company.

Fund-raising via OFS is quick. And an OFS issue can be wrapped up in one trading day, with only a few days prior intimation to the trading exchanges.

What’s more, retail investors are offered a discount over the floor price of the offer.

RC: “Let’s look at an example”Suppose the floor price is set at Rs 100. With a 5% retail investor discount.Because of huge demand, the issue gets oversubscribed 7 times. This means that for every 7 shares being applied for, only 1 share will get allotted.In this case, investors need to bid at a higher price to improve the chance of an allotment.If the investor wins the bid and is allotted shares, he or she will still get them at 5% discount

So, an OFS is worth bidding for at a price higher than the floor price.As you stand a good chance to make a quick profit.But take the advice of an experienced advisor before you take the plunge.

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