Government invites bids from merchant bankers by September 10th for IRCTC stake sale

Indian Railway Catering and Tourism Corp (IRCTC) stake sale is planned by the government in the current fiscal year. The government has decided to sell a part of the IRCTC stake owned by them. To manage the sale process they’ve invited merchant bankers to bid.

Currently, the Government of India holds an 87.40% stake in IRCTC. But they have to lower its stakes by 75% in IRCTC to meet the public holding norm of SEBI. “The GoI intends to disinvest a part of the paid-up equity capital of IRCTC out of its shareholding through ‘Offer for Sale (OFS) method of shares by promoters through the stock exchanges’ as per Securities and Exchange Board of India (SEBI) Rules and Regulations,” this statement was made by DIPAM while summoning request for proposal.

The merchant bankers have to submit their bids before the 10th of September. The shares of the IRCTC is shut at ₹1,346.65 apiece on the BSE, down 1.20% over the previous close.

The IRCTC is the only entity in India that is authorized to provide all the services in the railway department. From catering to tickets to packaged water, everything is looked after by the IRCTC. In October 2019 it was on the stock exchanges and had raised Rs. 645 crore through the IPO.

The government has a disinvestment target of Rs. 2.10 trillion and the company’s OFS will help in meeting it. They’ve planned to recover Rs. 1.20 trillion from the disinvestment of the public sector undertaking and the other Rs. 90,000 crore stake sale in financial institutions.

The Coronavirus outbreak has affected the equity markets and hence the Department of Investment and Public Asset Management (DIPAM) so far hasn’t been able to sell a single stake in any Central Public Sector Enterprise (CPSE). However, the government has collected the subscription amounting to Rs. 11,000 crore through Bharat Bond ETF – II for ‘AAA’ rated bonds of CPSEs.

Tuhin Kanta Pandey the secretary of DIPAM, had last month said, that the restrictions on international travel due to this pandemic have put breaks on strategic disinvestment of CPSEs like Air India and Bharat Petroleum Corporation Limited (BPCL) but still completing the transaction remains the priority of the government.

In the January – March quarter of the current fiscal year, the government is looking at listing an insurer on domestic stock markets. The DIPAM along with managing the CPSE has also started the process of listing the country’s largest insurer Life Insurance Corporation (LIC). It has also appointed an advisor for pre- Initial Public Offering (IPO) transaction.

The government is looking forward to launching an IPO of the Indian Railway Finance Corp Ltd (IRFC) and in January has submitted the Draft Red Herring Prospectus (DRHP) to the Securities and Exchange Board of India (SEBI) for IPO over 140 crore equity shares.

In this fiscal year, IRFC will probably be put on the block for the approved listing of five railway companies by the Union Cabinet in April 2017, which already includes, IRCON International Ltd, RITES Ltd, Rail Vikas Nigam Ltd and IRTC.

Image Credits- Railway Technology

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