Government to sell 4% stake in IRFC, floor price fixed:Target to raise ₹5,430 crore; retail bidding opens tomorrow

The government is selling up to 4% of its stake in IRFC, the finance company of Indian Railways. This sale is being done through an Offer For Sale (OFS). This offer is now open to non-retail investors. Meanwhile, retail investors will be able to place their bids on Thursday, February 26. The floor price for this has been fixed at ₹104 per share. On Tuesday, February 24, IRFC’s share closed at ₹109.40. This means the government has offered shares to investors at a discount from the current price. However, today these shares have fallen by about 4% to ₹105. The government’s stake will be reduced to 82.36% The government’s total stake in IRFC is 86.36%. Through OFS, the government will sell a 2% stake, which also includes a ‘green shoe option’ to sell an additional 2% stake. If this entire 4% stake is sold, the government’s stake in the company will decrease to 82.36%. Government aims to raise ₹5,430 crore through OFS The Secretary of the Department of Investment and Public Asset Management (DIPAM) stated that selling a 4% stake (approximately 52.26 crore shares) at ₹104 per share would fetch the government around ₹5,430 crore. The base offer size has been set at 26.13 crore shares. OFS opened today, and retail investors can bid tomorrow According to the DIPAM Secretary, this offer opened for non-retail investors on Wednesday, February 25. Meanwhile, retail investors will be able to place their bids on February 26. Knowledge Box: What is a ‘Green Shoe Option’? When the demand for a share sale (IPO or OFS) exceeds expectations, the company or government gets the right to sell more shares than the allotted quota. This is called the ‘Green Shoe Option’ or ‘Over-allotment Option’. In the case of IRFC, the government has reserved the option to sell an additional 2% shares. Learn about IRFC IRFC was incorporated on December 12, 1986. It is a dedicated financing arm of Indian Railways, whose primary objective is to raise funds from domestic and overseas capital markets. IRFC is a Navratna Public Sector Company under the Ministry of Railways, Government of India. It is also registered with the Reserve Bank of India (RBI) as a significant Non-Banking Financial Company (NBFC) and an Infrastructure Finance Company (NBFC-IFC). IRFC has played a significant role in expanding railways and their associated entities. This company arranges funds for a large part of the railway’s annual budget and plans.