IRFC fixes price band for Rs 4,600-crore IPO; govt to earn Rs 1,500 crore from issue opening on Jan 18

Indian Railway Finance Corporation (IRFC), a public sector undertaking under the railways ministry, on Wednesday fixed price band at Rs 25-Rs 26 per equity share for its Rs 4,600-crore initial public offering (IPO).

The offer will comprise up to 178.2 crore shares of face value of Rs 10 each. The IPO includes a fresh issue of up to 118.8 crore shares (fresh issue) and an offer for sale of up to 59.4 crore equity shares by the President of India, acting through the Ministry of Railways.

Thus, the government is expected to mobilise Rs 1,544 crore at the upper price band.

The government has set a target of raising Rs 2.1 lakh crore through divestment in the current financial year. This includes Rs 1.20 lakh crore through CPSE stake sale, and the remaining Rs 90,000 crore from financial institutions.

"IRFC coming up for listing with a Rs 4,600 cr+ issue in a price band of Rs 25-26 per share. Anchor book on Jan 15 and the main book from January 18-20," Department of Investment and Public Asset Management (DIPAM) Secretary Tuhin Kanta Pandey said in a tweet on Wednesday.

According to the company's statement, the issue includes a reservation aggregating to Rs 50 lakh for subscription by eligible employees and the issue less employee reservation portion is referred to as the net issue.

Bids can be made for a minimum of 575 shares and in multiples of 575 thereafter, it said. The issue is being made through the book building process wherein not more than 50 per cent of the net issue shall be available for allocation on a proportionate basis to qualified institutional buyers, it added. The company may allocate up to 60 per cent of the QIB portion to anchor investors on a discretionary basis in accordance with the Sebi regulation, the statement.

The net proceeds from the fresh issue are proposed to be utilised for augmenting the company's equity capital base to meet their future capital requirements arising out of growth in their business; and for general corporate purposes, it said.

In January 2020, IRFC had filed draft papers for its IPO.

The company's principal business is to borrow funds from the financial markets to finance acquisition/ creation of assets which are then leased out to the Indian Railways.

IRFC, set up in 1986, is a dedicated financing arm of the Indian Railways for mobilising funds from domestic as well as overseas markets. Its primary objective of IRFC is to meet the predominant portion of 'extra budgetary resources' requirement of the Indian Railways through market borrowings at the most competitive rates and terms.

The Union Cabinet had in April 2017 approved listing of five railway companies. Four of them -- IRCON International Ltd, RITES Ltd, Rail Vikas Nigam Ltd and Indian Railway Catering and Tourism Corp -- have already been listed.