Winning Bizness Desk
Mumbai. The Union Government has launched an Offer For Sale to divest up to 4 percent stake in Indian Railway Finance Corporation, the dedicated financing arm of Indian Railways. The move is aimed at mobilising an estimated ₹5,430 crore. The offer opened for non-retail investors on Wednesday, while retail investors will be able to bid on Thursday, February 26. The floor price has been fixed at ₹104 per share, reflecting a discount to the previous closing price.
Floor price set below market rate
On Tuesday, February 24, IRFC shares had closed at ₹109.40 on the exchanges. The government has fixed the OFS floor price at ₹104 per share, offering investors shares at a lower rate than the prevailing market price. On Wednesday, the stock reacted sharply and fell around 4 percent to trade near ₹105.
Key points at a glance:
- Floor price fixed at ₹104 per share
- Tuesday closing price stood at ₹109.40
- Shares slipped nearly 4 percent on Wednesday
- Discount offered to attract wider participation
The pricing strategy is seen as an attempt to ensure strong subscription, particularly from institutional buyers.
Government stake to fall to 82.36 percent
At present, the government holds 86.36 percent stake in IRFC. Under the base offer, 2 percent equity will be sold. In addition, there is a provision to offload another 2 percent under the green shoe option. If the entire 4 percent stake is divested, the government’s holding will decline to 82.36 percent.
- Details of the offer structure:
- Base offer size: 26.13 crore shares
- Total offer size with green shoe: 52.26 crore shares
- Potential post-sale holding: 82.36 percent
The share sale is being closely watched in the market as it reflects the government’s continued push for disinvestment in public sector enterprises.
₹5,430 crore revenue target through divestment
According to the Secretary of the Department of Investment and Public Asset Management, selling approximately 52.26 crore shares at ₹104 apiece could fetch around ₹5,430 crore. The proceeds will contribute to the government’s broader asset monetisation and fiscal management strategy.
The OFS opened for non-retail investors on February 25. Retail investors will be able to submit bids on February 26. The staggered bidding window is designed to ensure participation from both institutional and individual investors.
What green shoe option means
The green shoe option, also known as the over-allotment option, allows the seller to issue additional shares if demand exceeds the base offer. In this case, the government has retained the right to sell an extra 2 percent stake in IRFC if investor response remains strong. This mechanism helps stabilise prices and meet excess demand during large share sales.
IRFC’s role in railway expansion
Incorporated on December 12, 1986, IRFC serves as the principal financing arm of Indian Railways. It raises funds from domestic and international capital markets to support railway expansion and infrastructure projects. The company plays a crucial role in arranging a significant portion of the railway system’s annual financial requirements.
IRFC is a Navratna public sector undertaking under the Ministry of Railways. It is registered with the Reserve Bank of India as a systemically important Non-Banking Financial Company and also holds the status of an Infrastructure Finance Company. Over the years, it has been instrumental in funding rolling stock acquisition, track expansion and other capital-intensive projects critical to the growth of India’s rail network.
