The state-owned Indian Railway Catering and Tourism Corporation (IRCTC) is set to go public on 30 September 2019. The initial public offering (IPO) of the IRCTC is aimed at raising Rs 645 crore by the government. The price band of the IRCTC shares falls in the range of Rs 315-320 each.
The IRCTC IPO will close on 3 October 2019, and as per the government’s estimation, a sum of Rs 635.04 crore to Rs 645.12 crore will be raised. More than two crore shares of worth Rs 10 each will be issued in the IPO. The decision to go public is a part of the government’s full-year disinvestment plan.
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The IRCTC will not receive the proceeds from the sale of shares being issued as a part of the IPO. The whole idea behind IRCTC going public is to reduce the government’s stake. The government is currently managing various aspects of the services catered by the Indian Railways. The government’s stake will decrease by 12.5% due to the IPO.
Both the cap and floor prices are more than 30 times the face value of equity shares. By keeping the IRCTC employees’ interest in mind, 1.6 lakh shares are reserved for them. The total initial offering size is 12.6% of the total paid-up equity.
A minimum of 50% of the shares being issued as a part of the initial offering will be exclusively for the qualified institutional buyers, which includes two lakh shares for mutual funds proportionally. Furthermore, at least 15% of the initial offering will be made available for the non-institutional buyers and about 35% for the retail category.
The government is looking at raising Rs 90,000 crore from its disinvestment programme in the current fiscal and IRCTC IPO is an integral part of it. The government managed to raise Rs 85,000 crore in the last fiscal through disinvestment.
SBI Capital Markets Limited, IDBI Capital Market and Securities Limited, and Yes Securities (India) Limited are the books running lead managers of the IRCTC initial public offering process.
For any clarifications/feedback on the topic, please contact the writer at vineeth.nc@cleartax.in
Engineer by qualification, financial writer by choice. I am always open to learning new things.
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