Govt Will Sell 20% Of IRCTC To Private Firms: Rs 1367/Share Via Offer For Sale Route
The government is proposing to sell up to 20 per cent equity shares of Indian Railway Catering and Tourism Corporation (IRCTC).
Indian Railway Catering and Tourism Corporation, a listed public sector enterprise is a subsidiary of the Indian Railways that handles the catering, tourism and online ticketing operations of the latter, with around 5,50,000 to 6,00,000 bookings every day.
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.
IRCTC Offer for Sale(OFS):-
It will be sold through an Offer for Sale (OFS) which opens for subscription on Thursday.
Tuhin Kanta Pandey, Secretary of Department of Investment and Public Asset Management (DIPAM) said in a tweet “Offer for Sale in IRCTC opens tomorrow for Non Retail investors. Day 2 for retail investors. Govt. would divest 15 per cent equity with a 5 per cent green shoe option”.
The government of India has proposed selling up to 2.4 crore shares in IRCTC, representing 15% of the paid up equity share capital of the company through offer of sale route. The government has also proposed an additional share sale of 0.8 crore shares, representing 5% of the paid up equity share capital, under in the event of oversubscription. Combinedly, the base offer size and oversubscription option represent 20% of outstanding equity shares of the company or 3.2 crore shares.
The floor price for the offer shall be ?1367 per share. The price under the offer of sale route is at a 16% discount to today’s closing price.
The shares of IRCTC on Wednesday was down 1.55 per cent from its previous close and closed at at Rs 1,618.05 apiece on the BSE.
Due to the COVID-19 crisis, the exchequer is starved of funds and this selling of 3.2 crore shares is expected to garner Rs 4,374 crore.
To meet SEBI’s public holding norm, the government has to lower its stake in the IRCTC Company to 75 per cent which right now is 87.40 per cent.
The Disinvestment Target:-
Government has a target to meet the disinvestment target of Rs 2.10 lakh crore. Out of this 120000 crore will come from the disinvestment of PSUs while 90000 crore from the stake sale in financial institutions. IRCTC Offer for sale will help the government to inch towards this target.