PremiumThe initial public offering (IPO) of Indian Railway Finance Corporation Ltd will kick-start action in primary markets in 2021. The government-owned company, which is a dedicated market borrowing arm of the Indian Railways, has set a price band of ₹25 to ₹26 per equity share for the share sale that will be open from 18-20 January.
The government plans to sell around 13.64% in the company to raise around ₹4,633.38 crore at the upper end of the price band. The net proceeds from the fresh issue are proposed to be utilised for augmenting the equity capital base of the company to meet their future capital requirements arising out of growth in their business and for general corporate purposes.
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IRFC is a dedicated market borrowing arm of the Indian Railways and is wholly-owned by the Government acting through the Ministry of Railways. Its primary business is financing the acquisition of rolling stock assets and project assets of the Indian Railways and lending to other entities under the ministry.
“Over the last three decades, we have played a significant role in supporting the capacity enhancement of the Indian Railways by financing a proportion of its annual plan outlay," it said in the red herring prospectus (RHP). DAM Capital Advisors Limited (formerly known as IDFC Securities Limited), HSBC Securities and Capital Markets (India) Private Limited, ICICI Securities Limited and SBI Capital Markets Limited are the book running lead managers to the issue.
Though 2020 was a strong year for IPOs, government-run companies did not raise much funds through share sale. Divestment efforts by the government stood at ₹42871.94 crore in 2020 down 37% from ₹68,176.57 crore in the previous year, data from Prime Database showed. Out go the total public offers were worth ₹10,988 crore in 2020. In the primary markets, there were 15 main-board IPOs which collectively raised ₹26,611 crore, rising 115% from the ₹12,362 crore raised through 16 IPOs in 2019.
Strong retail participation in initial public offerings (IPOs), huge listing gains and highest-ever amount raised through qualified institutional placements (QIPs) and infrastructure investment trust (InvITs)/ real estate investment trusts (ReITs) were the key highlights of the year.
