IRCTC Stake Sale: All you need to know about government plans via offer for sale (OFS)

IRCTC, the only entity authorised by Indian Railways to provide catering services to railways, online railway tickets and packaged drinking water at railway stations and trains in India, was listed on stock exchanges in October 2019. The company had raised Rs 645 crore through the IPO. Now, in a latest development, it has been reported that the government is planning to sell about 15-20 per cent stake in IRCTC via offer for sale (OFS) and would like to complete the transaction in minimum number of tranches.

The government currently holds 87.40 per cent stake in IRCTC. To meet Sebi's public holding norm, it has to lower its stake in the company to 75 per cent.

The government sold about 15 per cent stake in defence manufacturer Hindustan Aeronautics (HAL) via OFS to raise around Rs 5,000 crore last month.

IRCTC OFS would help the government inch forward towards meeting the Rs 2.10 lakh crore disinvestment target for ongoing fiscal. Of this, Rs 1.20 lakh crore is to come from disinvestment of public sector undertakings and Rs 90,000 crore from stake sale in financial institutions.

Last month, the Department of Investment and Public Asset Management (DIPAM) had invited bids from merchant bankers by September 10 for managing the sale in Indian Railway Catering and Tourism Corp (IRCTC). However, it did not disclose the quantum of stake on offer in the Request for Proposal (RFP). Following this, a pre-bid meeting was held on September 4 with potential bidders.

DIPAM has now posted its response to the queries raised by potential bidders on its website.

The government is also looking at launching initial public offering (IPO) of Indian Railway Finance Corp Ltd (IRFC), and had filed draft red herring prospectus (DRHP) with the Securities and Exchange Board of India in January for IPO of over 140 crore equity shares.