IRFC Stake Sale Details: Government will sell 4% stake, know the target of raising how many thousand crores?

IRFC Stake Sale Details: The government is selling up to 4% of its stake in the railway finance company IRFC. This sale is being done through Offer for Sale (OFS). This offer has opened today for non-retail investors. Retail investors will be able to submit their bids on Thursday, 26 February. The floor price has been fixed at ₹104 per share. On Tuesday, February 24, IRFC shares closed at Rs 109.40. This means that the government is offering shares to investors at a discount from the current price. However, today the shares have fallen by almost 4% to Rs 105.

Government’s stake will reduce to 82.36%

The total stake of the government in IRFC is 86.36%. Through the OFS, the government will sell 2% stake, which also includes a ‘green shoe option’ to sell an additional 2%. If this entire 4% stake is sold, the government’s stake in the company will reduce to 82.36%.

Government wants to raise Rs 5,430 crore through OFS

The government will get about ₹5,430 crore by selling 4% stake (about 52.26 crore shares) at ₹104 per share, the Department of Investment and Public Asset Management (DIPAM) secretary said. The base offer size has been fixed at 26.13 crore shares.

OFS opens today, retail investors can bid tomorrow

According to DIPAM Secretary, this offer opened for non-retail investors on Wednesday, February 25. Retail investors will be able to bid on 26 February.

Knowledge Box: What is the ‘Green Shoe Option’?

When the demand for share sale (IPO or OFS) exceeds expectations, the company or government has the right to sell more shares than the fixed quota. This is called ‘green shoe option’ or ‘over-allotment option’. In the case of IRFC, the government has reserved the option to sell 2% more of its shares.

Know about IRFC

IRFC was formed on December 12, 1986. This is a special finance branch of Indian Railways, whose job is to raise funds from domestic and international 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 large non-banking financial company (NBFC) and an infrastructure finance company (NBFC-IFC). IRFC has played a big role in the expansion of Railways and its related institutions. It funds a large portion of the Railways’ annual budget and plans.