The Indian government has kicked off a significant stake sale in Indian Railway Finance Corporation. This Offer for Sale aims to dilute up to a 4 per cent stake in the company. The move is a key part of the government’s broader disinvestment strategy.
Non-retail investors got the first opportunity to bid, with the window opening on February 25. Retail investors will follow suit, placing their bids on the next day. This structured approach ensures orderly participation from different investor classes.
The floor price for the IRFC OFS has been firmly set at Rs 104 per share. This price acts as the minimum bidding threshold for all participants. It provides a clear benchmark for valuation as the sale proceeds.
A base offer of 2 per cent of equity is on the table initially. This translates to over 26 crore shares being made available. An additional 2 per cent stake could be sold via a green shoe option, depending entirely on market demand.
The government currently holds a commanding 86.36 per cent stake in IRFC. This sale will slightly reduce that substantial holding. It represents a measured step towards increasing public shareholding in the state-backed financier.
What exactly is an OFS? It stands for Offer for Sale. This mechanism allows large shareholders to sell existing shares directly to the public through the stock exchange. It’s a transparent and efficient route for stake dilution.
The sale is being conducted by the President of India, represented by the Ministry of Railways. All transactions will occur through the seller’s appointed brokers. A separate window on the stock exchanges has been dedicated for this specific OFS.
A small portion of shares is also reserved for eligible employees. Up to 25,000 equity shares may be offered under an employee quota. This allows staff to have a direct stake in the company’s future.
Eligible employees can apply for shares worth up to Rs 500,000. This is in line with the terms set out in the OFS guidelines. It’s a benefit designed to align employee interests with corporate performance.
The IRFC OFS is a notable event for the markets. It provides both institutional and retail investors a chance to acquire shares. The separate bidding days help manage the flow and competition effectively.
This transaction underscores the government’s ongoing commitment to its disinvestment programme. Such sales aim to unlock value and improve market liquidity. They also broaden the shareholder base for public sector enterprises.
The success of the green shoe option will be closely watched. It serves as a gauge for investor appetite in such offerings. Strong demand could see the full 4 per cent stake being divested.
For market participants, the Rs 104 floor price is the key number. All bids must meet or exceed this valuation. It sets the stage for the pricing discovery process over the two-day event.
The IRFC OFS is now live for non-retail players. Tomorrow, the baton passes to retail investors. The coming days will reveal the market’s response to this strategic divestment.