(Photo: Reuters)
(Photo: Reuters)

Govt collects 729 cr from sale of 10% stake in RITES

  • The government undertook Offer for Sale for 10% of paid-up equity in RITES Limited on 22-25 Nov
  • Shares of the railways consultancy firm have slumped nearly 8% in past three sessions on the government’s decision to divest its stake in the company

New Delhi: Finance Ministry has collected 729.44 crore from divestment of 10% stake, or 2.5 crore equity shares, in its railway engineering consultancy company RITES Ltd through the Offer-For-Sale (OFS) route.

“Government undertook offer for sale for 10% of paid-up equity in RITES on 22-25 November 2019. The base offer was fully subscribed (100.01%) with disinvestment proceeds of 729.44 crore," secretary of department of investment and public asset management (DIPAM) said on the micro-blogging and social networking website Twitter on Tuesday.

Shares of the company have slumped nearly 8% in past three sessions on the government’s decision to divest its stake in the company. The stock fell a marginal 0.25% to 282.15 on the BSE today.

The government had proposed selling 10% stake in the company on 22 November to non-retail investors only and on 25 November to retail investors and non-retail investors, with an option to additionally sell up to 1.25 crore equity shares, representing 5% stake, through the offer-for-sale route.

The floor price for the OFS was set at 293.50 per share. Retail investors were to be allocated shares at a discount of 5% to the cut-off price.

As on 30 September, the government owned 87.4% stake in RITES, the only export arm of Indian railways for providing rolling stock overseas.

Proceeds from the transaction will take the government closer to its divestment target of 1.05 trillion for the current financial year, higher than the target of 90,000 in 2018-19.

Last week, the Cabinet had approved the privatisation of Bharat Petroleum Corporation Ltd (BPCL). The government will sell its entire 53.29% stake in the company to a strategic buyer along with transferring management control. The sale will not include Numaligarh Refinery Ltd in Assam. The refinery will become a separate entity to be later hived off to another public-sector firm.

The Cabinet had also announced selling its 30.8% shareholding in Container Corporation of India Ltd (Concor) to a strategic buyer along with handing over the management control. The government currently holds 54.8% in the company. The Centre will also dilute its 63.75% stake in Shipping Corporation of India Ltd.

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