Government to sell up to 20% stake in IRCTC via OFS, opens today

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The government is planning to disinvest 20% stake in Indian Railway Catering and Tourism Corporation Ltd. through an offer-for-sale to raise Rs 4,374 crores for the exchequer starved of funds due to the COVID-19 crisis which opens for subscription on Thursday.

“Offer for Sale in IRCTC opens tomorrow for Non Retail investors. Day 2 for retail investors, the government would divest 15% equity with a 5% greenshoe option,” Department of Investment and Public Asset Management Secretary Tuhin K said on Wednesday.

The promoter proposes to sell up to 2,40,00,000 equity shares of IRCTC, representing up to 15% stake, with an option to additionally sell 80,00,000 shares, representing 5% of the total issued and paid-up equity share capital, the company said in a regulatory filing. In all, the promoter Government of India will sell 3.2 crore shares.
The floor price for the offer shall be Rs 1,367per share, it said. Shares of IRCTC on Wednesday closed at Rs 1,618.05 apiece on the BSE, down 1.55 percent from its previous close. IRCTC OFS will help the government inch forward in meeting the Rs 2.10 lakh crore disinvestment target. Of this, Rs 1.20 lakh crore will come from disinvestment of public sector undertakings and another Rs 90,000 crore from stake sale in financial institutions.

The government currently holds 87.40 percent stake in IRCTC. To meet SEBI public holding norms, the government has to lower its stake in the company to 75 percent.

IRCTC, the only entity authorized by Indian Railways to provide catering services, online railway tickets, and packaged drinking water at railway stations and trains in India, was listed on the stock exchanges in October 2019. The company had raised Rs 645 crore through the IPO.

The Union Cabinet had in April 2017 approved the listing of five railway companies. While four of them,  IRCON International Ltd, RITES Ltd, Rail Vikas Nigam Ltd, and IRTC – have already been listed, IRFC is likely to be put on the block this fiscal