Centre planning to raise Rs 1,500 crores from IPO of these two PSUs

New Delhi: As the government chases a disinvestment target of Rs 90,000 this year, it is looking to raise Rs 1,500 crores from initial public offerings (IPOs) of two Railway subsidiaries — Indian Railway Catering and Tourism Corporation (IRCTC) and Indian Railway Finance Corporation (IRFC) — by September, a source said. The Centre had initiated the process of launching an IPO of IRFC earlier this year, but the company had then said that its borrowing cost will go up if it is listed, the source added. A final call on the matter will now be taken by the Cabinet.

"We are working to bring IPO of Indian Railway Catering and Tourism Corporation (IRCTC) and IRFC by September. IRFC may have to go to Cabinet again after elections," the source said.

How much is the IPO expected to fetch individually?

The government is expecting to raise Rs 500 crores from IRFC IPO and Rs 1,000 crores from IRCTC IPO. While IRFC avails funds from capital markets and through borrowing for funding Railway's expansion plans, IRCTC looks after catering and tourism activity of the Railways.

IPOs will be announced after elections

"The draft red herring prospectus would be soon filed with market regulator SEBI for IRCTC and for IRFC, it would be after the elections get over and the government is formed," the official added.

The backdrop

The Centre raised Rs 480 crores by offloading 12.12 percent stake in Rail Vikas Nigam Ltd (RVNL) earlier this month. In April 2017, the listing of five Railway companies — IRCON international, RITES, RVNL, IRFC and IRCTC — was approved by Cabinet Committee on Economic Affairs. Following the decision, IRCON international and RITES were listed in 2018-19.

Last year, the government had set the target of raising Rs 80,000 crores from disinvestment and had exceeded the target by Rs 5,000 crores.