IRFC IPO gets an approval from SEBI

New Delhi: State-run IRFC (Indian Railway Finance Corporation) has got approval from market regulator SEBI for its IPO (initial public offering). The IPO comprises fresh issue of 93.8 crore equity shares and an offer for sale of 46.9 crore equity shares by the government. According to an update on the market regulator's website, the observation letter was issued on February 25.

Govt looking to meet disinvestment target via IRFC IPO

The government is looking to meet its disinvestment target of Rs 65,000 crore for FY2019-20 through sale of minority stakes in various PSUs. As was reported by PSU Watch, IRFC IPO is part of the government's plan to meet the disinvestment target. The Centre is looking to raise Rs 1,000 crore through IRFC IPO. At least five-six minority stake sale in various PSUs that are expected to fetch Rs 15,000 crore and the NTPC-THDC-NEEPCO deal are expected to help the government meet the revised divestment target of Rs 65,000 crore before the end of FY2019-20, a senior government official had told PSU Watch.

The backdrop

The SEBI observations are necessary for a company to launch public issues such as an IPO, follow-on public offer and rights issue. The net proceeds of the IPO are proposed to be used towards augmenting the company's equity capital base to meet future capital requirements arising out of growth in business and general corporate purposes, according to draft red herring prospectus (DRHP). The offer is being managed by IDFC Securities, HSBC Securities and Capital Markets, ICICI Securities and SBI Capital Markets. IRFC equity shares are proposed to be listed on BSE and NSE. The state-run company is the dedicated market borrowing arm of Indian Railways, and its primary business is financing the acquisition of rolling stock assets.

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