Govt Will Sell 20% Share In IRCTC To Private Firms, Investors Via OFS Route: How Will It Work?

We already know that the Government is planning to sell off their stake in IRCTC. News is that the Government is looking to sell about 15-20 percent of the stake through a minimum number of tranches.

Under the disinvestment plans, the government is working on getting private players to run multiple entities, which includes the BPCL, multiple PSU banks, Indian Railways. The Government has recently announced their plans of selling off its stakes in LIC through an IPO as well. 

Government Will Sell 15-20% Stake In IRCTC; Bids Invited From Sept 11

It was only last month when the Government announced that they will be putting up 25 percent of their stake in the IRCTC (Indian Railway Catering and Tourism Corporation); the bidding was announced to begin on 11 September – 2 days from today.

Last month, bids have been invited to appoint merchant bankers and selling bankers for the potential deal by the Department of Investment and Public Asset Management (DIPAM). 

As per the DIPAM, “The indicative percentage is 15 per cent to 20 per cent. The exact details will be shared with the selected merchant bankers.” These stakes will be sold off via offer for sale (OFS).

However, the quantum of stake on offer hasn’t been revealed by the DIPAM in the Request for Proposal (RFP).

Government Wants Transactions To Be Conducted In Minimum Tranches

As of now, the government stake in IRCTC is as much as 87.40 % however if they want to follow SEBI’s public holding rules the state has to be lowered in the company to 75%. 

Also, the DIPAM announced that the Government of India prefers that the transactions would be conducted in a minimum number of tranches as an overhang is not what they would like. Additionally, if there is more than one tranche used, the payment made to the merchant bankers would be pro-rata. 

 the government plans to disinvestment Rs 2.10 lakh crore; of which, Rs. 1.20 lakh crore would be from the disinvestment of public sector undertakings and 90000 crores from the sale of stakes in financial institutions.