Govt to Divest Up to 4% Stake in IRFC via OFS; Shares in Focus as Offer Opens for Subscription Today

The government has initiated a partial stake sale in Indian Railway Finance Corporation through an Offer for Sale (OFS), signalling continued efforts towards public sector disinvestment. 

The transaction includes a base offer along with a green shoe option, allowing flexibility depending on investor demand. 

Market participants are expected to monitor subscription levels and pricing response as the offer opens in phases for different investor categories.

Structure of the Offer for Sale

The government plans to divest a 2% equity stake in IRFC via the OFS mechanism, with an additional 2% available under a green shoe option. This structure allows the government to increase the size of the sale if investor participation remains strong during the offering period.

The base offer comprises approximately 26.13 crore shares, representing 2% of the company’s total issued and paid-up equity capital. An equal number of shares may be sold if the additional option is exercised.

Floor Price and Potential Proceeds

The floor price for the OFS has been fixed at ₹104 per share. At this valuation, the government could raise nearly ₹5,430 crore if the entire 4% stake is divested. The pricing will serve as the minimum bid level for investors participating in the offering.

Government Shareholding Impact

At present, the government holds an 86.36% stake in IRFC under the Ministry of Railways. Following completion of the sale, the shareholding is expected to decline to about 82.36%, assuming full subscription and exercise of the green shoe option.

Subscription Timeline

The OFS opens for non-retail investors on 25 February, while retail investors will be able to place bids on 26 February. The staggered participation window is designed to allow institutional demand discovery before retail participation begins.

Disinvestment Strategy Context

The transaction forms part of the government’s broader disinvestment programme aimed at improving public shareholding levels in state-owned enterprises while mobilising capital through market-based mechanisms. Investor response to the OFS may influence short-term trading activity in the stock.

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Conclusion

The OFS in IRFC represents a routine divestment exercise aligned with the government’s capital market strategy. Subscription trends, pricing dynamics and investor participation are likely to determine near-term market sentiment towards the stock as the offering progresses.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation or investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions. 

Investments in the securities market are subject to market risks. Read all related documents carefully before investing.