The opening of the Indian Financial Corporation of Railways (IRFC) Initial Public Offering (IPO) of Rs 4,634 crore is slated for January 18, becoming the first public offering 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 carries up to 178.20 crore of shares, including a new issue of 59.43 shares of capital of crore and an offer to sell a maximum of 118.80 crore shares. The issue price range is in the order of Rs 25-26 per share with a par value of Rs 10 each. According to a trader trading in pre-IPO and unlisted stocks, IRFC shares were trading at a premium of just Rs 1.20 over the issue price of Rs 26 each, on the gray market today.
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Who can bid how much?
Offers for issue may be made for a minimum of 575 Equity Shares and in multiples thereafter. Up to 50 percent of the net issuance will be reserved for Qualified Institutional Buyers (QIB) while the company has reserved no more than 35 percent of the issuance for retail investors. However, 15% of the show will be reserved for the non-institutional category.
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IRFC received Sebi’s approval for its public offering on February 25, 2020. The Indian Railways dedicated market lending arm will use the net proceeds to increase the company’s equity to meet future needs. in capital arising from business growth and general corporate objectives. It is proposed that the shares of IRFC be listed on the ESB and the NSE. DAM Capital Advisors Ltd, HSBC Securities and Capital Markets (India) Private Ltd, ICICI Securities Ltd and SBI Capital Markets Ltd are the lead managers of the offering. While KFin Technologies Private Ltd will be the registrar of the problem.
IRFC to benefit from Indian Railways transformation plans
Abhay Doshi, Founder – UnlistedArena.com dealing with pre-IPO and unlisted stocks, told The Bharat Express News Online that IRFC may be the biggest beneficiary of India’s ongoing expansion and transformation plans by the Indian government. It benefits from a competitive cost of borrowing based on strong credit ratings and diversified sources of income. Strong asset-liability management and a low-risk business model make the company more attractive.
According to RHP, IRFC’s main activity is to finance the acquisition of rolling stock and project assets from Indian Railways and to lend to other entities under the Ministry of Railways. Over the past three decades, IRFC has played an important role in supporting the capacity building of Indian railways by funding part of its annual expenses.