Govt to sell additional shares in IRFC as offer for sale receives robust bids
The government had initially planned to sell a 1% stake in IRFC, with an additional 1% over-allotment option to meet excess demand. The floor price was fixed at ₹91 per share. At the floor price, the government is expected to raise about ₹2,379 crore from the share sale.
New Delhi: The government's stake sale in Indian Railway Finance Corporation Ltd (IRFC) received a strong response from institutional investors on Wednesday, with the issue subscribed 1.86 times on the first day. The Centre has decided to exercise the greenshoe option in view of the robust demand, enabling it to sell an additional 1% stake in the state-run company.
The Department of Investment and Public Asset Management (DIPAM) secretary Arunish Chawla said in a post on X that the offer for sale (OFS) had been subscribed 1.86 times on the opening day and that the government would exercise the greenshoe option to meet excess investor demand.
“Retail investors and eligible employees can place bids on Thursday,” said Chawla.
Quick answers to key questions
The purpose of the OFS is to divest up to 2% of the government's equity stake in the Indian Railway Finance Corporation (IRFC) to raise capital and enhance liquidity.
The government exercised the greenshoe option due to robust demand from investors, allowing it to sell an additional 1% stake in IRFC beyond the initial offering.
The market has shown strong investor interest, with the initial share sale being subscribed 1.86 times on the opening day, indicating confidence in IRFC's business model and growth prospects.
Yes, retail investors may consider participating in the OFS, especially given the attractive floor price set and the positive response from institutional investors, although they should monitor market conditions.
The IRFC stake sale is expected to raise approximately ₹2,379 crore for the government, contributing to its broader disinvestment strategy aimed at raising ₹80,000 crore.
The government had initially planned to sell a 1% stake in IRFC, with an additional 1% over-allotment option to meet excess demand. The floor price for the issue was fixed at ₹91 per share, representing a discount to the prevailing market price. At the floor price, the government is expected to raise about ₹2,379 crore from the share sale.
The IRFC stock fell 6.2% to settle at ₹92.53 on the BSE on Wednesday.
The government currently holds 11.06 billion shares, equivalent to an 84.65% stake in IRFC. Based on the previous day's closing price of ₹98.69 per share, the value of the Centre's holding is estimated at ₹1.09 trillion, while the company's total market capitalisation stands at ₹1.29 trillion.
Confidence reflected
Ranjanesh Sahai, former secretary in the Railway Board, said that the strong investor response reflects confidence in IRFC's evolving business model, diversified financing portfolio and growth prospects.
“IRFC has graduated from being a financier confined to the Railways. With the railway budget being merged with the general budget, IRFC’s future had seemed unclear. However, with its basket of institutional borrowers expanding over time and its books becoming increasingly robust, it has pleasantly surprised the investment community with a quantum jump in both scale and reputation,” said Sahai.
“The rapidly growing profit margins and the company's visible strengths have been reflected in the confidence reposed by institutional investors, leading to the shares being handsomely oversubscribed. A bigger test comes tomorrow, when the aam aadmi (retail investors) will also respond to the offering,” he added.
Mint reported on 13 May that the ministry of railways was planning to sell 2-3% minority stakes in its listed state-run companies through the OFS route - in which no fresh equity is raised and the proceeds go to existing shareholders instead of the company - in FY27 as part of the government's disinvestment programme and asset monetization, under which it aims to raise ₹80,000.
So far, the government has raised ₹16,479.89 crore through stake sales in five public sector companies.
About the Author
Dhirendra Kumar is a seasoned policy reporter with about 20 years of experience in deep, on-ground reporting across key economic and governance sectors. His work spans finance, public expenditure, disinvestment, public sector enterprises, textiles, trade, consumer affairs, and agriculture, with a strong focus on uncovering structural policy shifts and their real-world impact.<br><br>Kumar has been awarded the Chaudhary Charan Singh Award for Excellence in Journalism in Agricultural Research and Development, recognising his contribution to reporting on critical issues in the farm sector. He has also been a recipient of a fellowship in international trade from the National Press Foundation, which has further strengthened his coverage of global trade dynamics and their implications for India.<br><br>Kumar is known for breaking complex policy developments into clear, accessible stories. His reporting focuses on uncovering under-reported trends, explaining policy shifts, and helping readers stay informed about developments that shape India’s economic landscape.
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