The Rs 4,634-crore Indian Railway Finance Corporation (IRFC) initial public offer (IPO) is scheduled to open on January 18, becoming the first public issue of the new calendar year 2021. The issue will close for subscription on January 20, 2021. According to the red herring prospectus (RHP), the issue is of up to 178.20 crore shares, comprising a fresh issue of 59.43 crore equity shares and offer-for-sale of up to 118.80 crore shares. The price band of the issue is in the range of Rs 25-26 per share of face value of Rs 10 each. According to a trader dealing in pre-IPO and unlisted shares, IRFC shares were seen trading with just Rs 1.20 premium over the issue price of Rs 26 apiece, in the grey market today.
Who can bid how much?
The bids for the issue can be made for a minimum of 575 equity shares and in multiples thereafter. Up to 50 per cent of the net issue will be reserved for the Qualified Institutional Buyers (QIB) while the company has reserved not more than 35 per cent of the issue for the retail investors. However, 15 per cent of the issue will be reserved for Non-Institutional category.
IRFC received Sebi’s approval for its public issue on 25 February 2020. The dedicated market borrowing arm of the Indian Railways will utilise the net proceeds towards augmenting the company’s equity capital base to meet future capital requirements arising out of growth in business and general corporate purposes. The shares of IRFC are proposed to be listed on BSE and NSE. DAM Capital Advisors Ltd, HSBC Securities and Capital Markets (India) Private Ltd, ICICI Securities Ltd and SBI Capital Markets Ltd are the book running lead managers to the offer. While KFin Technologies Private Ltd will be the registrar to the issue.
IRFC to benefit from transformation plans of Indian Railways
Abhay Doshi, Founder- UnlistedArena.com dealing in Pre-IPO & Unlisted Shares, told Financial Express Online, IRFC can be the biggest beneficiary of the ongoing expansion and transformation plans of Indian Railways by GOI. It enjoys the benefit of competitive cost of borrowings based on strong credit ratings and diversified sources of earning. Strong asset-liability management and low risk business model makes the company more attractive.
According to RHP, IRFC’s 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 of Railways. Over the last three decades, IRFC has played a significant role in supporting the capacity enhancement of the Indian Railways by financing a proportion of its annual plan outlay.