Promoter Holding Pre and Post issue

1. Pre-Issue Promoter Holding

This is the percentage of shares held by the promoters (founders, owners, key stakeholders) before the IPO opens.

It shows how much control promoters have in the company before bringing in public investors.

2. Post-Issue Promoter Holding

After the IPO, when new shares are issued to the public, the promoters’ percentage holding usually decreases because the total number of shares increases.

This is called dilution of promoter holding

Example

Let’s understand how fresh issue and offer for sale (OFS) affect promoter holding:

1. Fresh Issue of Shares

• The company issues new shares to the public.
• Impact on Promoter Holding:
  • The number of promoter shares remain the same, but the total number of shares increases. This causes dilution in promoter holding %.

Example: Shanti Gold International IPO was conducted through fresh issue of 18,096,000 shares. The number of shares promoters owe (pre and post-issue) was fixed to 53,989,200 but as the total number of shares post-issue got increased from 54,000,000 to 72,096,000 shares, the promoters stake decreased from 99.99% to 74.89%.

2. Offer for Sale (OFS)

• Promoters (or existing shareholders) sell part of their existing shares to the public.
• Impact on Promoter Holding:
  • Total shares remain the same (no new shares created).
  • Promoter holding reduces because they sell a part of their stake.

Example: Travel Food Services IPO of Rs 2,000 crore was entirely an OFS. The total shareholding pre and post-issue in this IPO was 1,31,679,484 shares. But as promoters sold stake in the company their stake decreased from 1,31,679,484 shares (100% stake) to 1,13,493,870 (86.19%).