Offer for Sale (OFS) serves the same purpose as that of traditional follow on public offerings, is used by promoters to dilute their holdings in listed companies through the exchange-based bidding platform. All categories of investor including small retail investors can participate in OFS issuances. Market regulator Sebi launched the OFS route in January this year to help market conditions and also meet the 25% public shareholding norm imposed by finance ministry in 2009.The norm kicks in form June 2013.
The advantages of OFS are as follows
- It is very cost-effective & Convenient way to arrange money from market
- OFS Involves least amount of paper work since it is a system based bidding platform
- It is less time consuming due to automation process involved
- It provides minimum spread between application & allotment of shares