IRCTC offer-for-sale: Issue subscribed nearly 2 times on first day

New Delhi, Dec 10: The offer-for-sale for the Indian Railway Catering and Tourism Corp (IRCTC) got a good response from non-retail investors as the issue was subscribed nearly two times on day one.

Retail investors will get chance to bid for IRCTC offer-for-sale (OFS) on Friday, the last day for the issue, Department of Investment and Public Asset Management (DIPAM) Secretary Tuhin Kanta Pandey said. The government is planning to sell up to 20 per cent stake in IRCTC through OFS which opened for subscription on Thursday.

"Offer for Sale of Govt shares in IRCTC got great response on day one. Issue subscribed 1.98 times of base size at a clearing price above the floor price by non-retail investors. Govt has decided to exercise the green shoe option. Retail investors get chance to bid tomorrow," said Pandey said in a tweet.

The promoter proposes to sell up to 2,40,00,000 equity shares of IRCTC, representing up to 15 per cent stake, with an option to additionally sell 80,00,000 shares, representing 5 per cent of the total issued and paid up equity share capital, the company had said in a regulatory filing.

The floor price for the offer shall be Rs 1,367, it had said.

In all, the promoter, Government of India will sell 3.2 crore shares, which is expected to garner Rs 4,374 crore for the exchequer starved of funds due to the COVID-19 crisis. Shares of IRCTC on Thursday closed at Rs 1451.95 apiece on the BSE, down 10.27 per cent from its previous close. IRCTC OFS will help the government inch closer in meeting the Rs 2.10 lakh crore disinvestment target.

Of this, Rs 1.20 lakh crore will come from disinvestment of public sector undertakings and another Rs 90,000 crore from stake sale in financial institutions. The government holds 87.40 per cent stake in IRCTC. To meet Sebi's public holding norm, the government has to lower its stake in the company to 75 per cent.IRCTC, the only entity authorised by Indian Railways to provide catering services, online railway tickets and packaged drinking water at railway stations and trains in India, was listed on the stock exchanges in October 2019.

The company had raised Rs 645 crore through IPO. The Union Cabinet had in April 2017 approved listing of five railway companies. While four of them -- IRCON International, RITES Ltd, Rail Vikas Nigam Ltd and IRTC -- have already been listed, IRFC is likely to be put on the block this fiscal.