Government Initiates Strategic Divestment in Indian Railway Finance Corporation
The Indian government has announced a significant divestment move, planning to sell up to a 4 per cent stake in the state-owned Indian Railway Finance Corporation Ltd (IRFC) through an Offer for Sale (OFS) mechanism. According to a regulatory filing by the company, the OFS will commence on Wednesday, marking a strategic step in the government's asset monetization efforts.
Financial Details and Floor Price Set for the Stake Sale
IRFC has disclosed that the floor price for the OFS has been fixed at Rs 104 per equity share. If the full 4 per cent stake is divested, this transaction could enable the government to raise approximately Rs 5,430 crore, as reported by PTI. This substantial capital infusion is part of broader fiscal management and public sector reform initiatives.
OFS Schedule and Investor Participation Structure
The offer will follow a structured timeline to accommodate different investor categories. It will open first for non-retail investors on Wednesday, while retail investors will have the opportunity to bid starting Thursday. This phased approach ensures orderly market participation and minimizes volatility.
Arunish Chawla, Secretary of the Department of Investment and Public Asset Management (DIPAM), confirmed the details in a post on X. He stated, "Offer for Sale for Indian Railway Finance Corporation (IRFC) opens tomorrow for Non-Retail investors. Retail investors can bid on Thursday. Government offers to disinvest 2% equity in the IRFC with an additional 2% as green shoe option."
Share Sale Breakdown and Government Stake Impact
Under the OFS framework, the government proposes to sell up to 26.13 crore shares, which represents a 2 per cent base offer size. Additionally, an extra 26.13 crore shares are available under a green shoe option, equivalent to another 2 per cent of IRFC's total issued and paid-up equity share capital. This dual structure provides flexibility to adjust the sale based on market demand.
Currently, the government holds an 86.36 per cent stake in IRFC. Upon completion of this share sale, its ownership will decrease to 82.36 per cent, reflecting a gradual reduction in state control as part of disinvestment policies aimed at enhancing market liquidity and corporate governance.
Market Performance and Recent Share Price Trends
In the latest trading session, shares of IRFC closed at Rs 109.40 apiece on the BSE, registering a decline of 2.19 per cent. This movement highlights the market's reaction to the impending divestment announcement and broader economic factors influencing investor sentiment.
This divestment initiative underscores the government's commitment to optimizing its portfolio in public sector enterprises, leveraging such sales to generate revenue for developmental projects and fiscal consolidation. Stakeholders, including investors and market analysts, will closely monitor the OFS process for its implications on IRFC's future performance and the broader financial landscape.
