New Delhi, July 26, 2023, 8:30 PM IST: The Indian government is set to divest a stake of up to 5.36% in Rail Vikas Nigam Ltd (RVNL), a state-owned railway infrastructure company, through an Offer for Sale (OFS) at Rs 119 per share. As per the exchange filing on Wednesday, the stake sale is expected to generate around Rs 1,330 crore for the government.
The government currently holds a 78.2% stake in RVNL and plans to initiate the stake sale by offering a 3.4% holding through the OFS, with an additional option to sell 1.96% more if there is an oversubscription. Non-retail investors can participate in the OFS starting tomorrow, while retail investors will have the opportunity to bid on Friday, as announced by the Department of Investment and Public Asset Management (DIPAM).
The floor price for the share sale has been fixed at Rs 119 per share, representing an 11% discount to the closing price of Rail Vikas stock on Wednesday.
Mr. Dipam Secretary, while sharing the information on social media platform Twitter, stated, “Offer for sale in RVNL opens tomorrow for non-retail investors. Retail investors can bid on Friday. Government will divest 5.36% equity including a Green Shoe option of 1.96%.”
The government’s move to divest its stake in RVNL is part of its broader disinvestment plan to raise funds for various development projects and meet its divestment target for the fiscal year 2023-24. Out of the targeted Rs 51,000 crore divestment, the government has already raised Rs 4,230 crore through share sales in other state-run firms.
It’s worth noting that in May, the government successfully sold a 3% stake in Coal India as part of its disinvestment strategy.
RVNL plays a vital role in developing and upgrading railway infrastructure in India. The proceeds from the stake sale are expected to bolster the government’s financial resources and support the expansion and modernization of the country’s rail network.
Investors are closely monitoring the OFS in RVNL, considering its significance in the government’s disinvestment drive. As the sale opens for non-retail investors tomorrow, market participants will keenly observe the response and demand for the shares. The retail investors’ bidding on Friday will further determine the success of the stake sale and its impact on the market.
With the economy steadily recovering from the impact of the pandemic, the government’s divestment plans are expected to attract investor interest and contribute to India’s economic growth in the coming months.