2021’s IPO journey is going to start with a bang. In the new year’s first big IPO launch, Indian Railway Financial Corporation’s maiden offer will float in the market on January 18. The PSU NBFC targets to divest 1,782,069,000 equity shares aggregating to Rs 4,633.38 crores. The shares will launch in the price band of Rs 25-26 apiece.
Last year the IPO market performed well despite COVID-19 outbreak. Several IPOs were subscribed more than 150 times with Mrs Bectors IPO subscribed 198 times, highest of the year. Experts believe the buoyancy in the market to continue. The market anticipates as many as thirty IPOs to debut in the market during 2021.
IRFC IPO’s three days subscription window will remain open from January 18 to 20, 2021. The issue size contains both fresh equities and offer for sale shares.
IRFC or Indian Railway Finance Corporation is the finance arm of Indian Railways, a wholly government-owned PSU under Ministry of Railways. The unit is involved in financing acquisition of rolling stock assets, leasing railway infrastructure, and funding to entities under MOR. It finances several projects for the Indian Railways and is critical for its development. In 2019, IRFC provided Rs. 525.35 billion to the Indian Railways accounting for 39.34 percent of Railway’s total expenditure of Rs. 1,334 billion.
IRFC is one of the most anticipated IPOs of the year. As the anchor book for the offer opens on January 15, interested investors need to keep the following important points in mind.
Important points to know about IRFC IPO
- In 2017, Union cabinet approved disinvestment of five railway companies including IRFC. IRFC is the firth railway division to list in the bourses. Previously, Indian Railway Catering and Tourism Corporation (IRCTC) listed in the exchanges with 100 percent listing gain in 2019
- The issue size contains both fresh shares and offer for sale equities from GOI. IRFC is looking to divest 1,78,20,69,000 equity shares, including 1,18,80,46,000 fresh equities and 59,40,23,000 offer for sale shares
- The offer will open for Rs 4,633.38 crores. The shares will launch in the price band of Rs 25-26, expected to fetch Rs 4,455 crores and Rs 4,633.38 crores respectively at the lower and upper band
- The issuer has reserved 60 percent of the offer size for QIB investors, remaining 15 and 35 percent will allot to non-institutional and retail investors
- Equity shares worth Rs 50 lakhs is reserved for eligible employees, constitutes 13.64 percent of the post paid-up capital of the company
- The minimum bid size decided for retail-individual investors is 575 shares and investors can bid for a maximum of 13 lots, paid through UPI
- DAM Capital Advisors, HSBC Securities and Capital Markets (India), ICICI Securities, and SBI Capital Markets are appointed the book-running managers to manage the offer on behalf of IRFC
- KFintech Private Limited will act as the registrar of the offer
- The shares will launch in both the BSE and NSE
The offer received a tepid response in the grey market, but most brokerage firms recommended to subscribe for IRFC IPO keeping long-term investment in mind. IRFC IPO may be a good choice for long-term profitability because of its relatively low-risk business model, pointed out GEPL Capital. IRFC IPO price pegged at a comfortable range of Rs 25-26 is also likely to attract retail investors.