IRFC: Government decides to skip green shoe option as OFS not fully subscribed

Institutional investors placed bids for over 22.34 crore IRFC shares, which is 94.98 per cent of the over 23.52 crore shares reserved for them in the offer for sale (OFS).

• Government limits IRFC stake sale to base 2% in OFS
• No oversubscription option exercised in IRFC share sale
• Institutional bids reached 94.98% of reserved shares

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The Government of India has decided not to exercise the oversubscription option in the Offer for Sale (OFS) of shares in Indian Railway Finance Corporation (IRFC), limiting the stake sale to the base 2% offer.

The initial plan was to divest a 2% equity stake in IRFC through the OFS, with an additional 2% greenshoe option that could have taken the total sale to 4%. However, in a communication to the stock exchanges dated February 25, the Ministry of Railways, acting on behalf of the President of India as promoter, said it would not exercise the oversubscription option.

“Would not exercise the oversubscription option of 26,13,70,120 equity shares, representing 2% of the company’s paid-up equity share capital,” the ministry said in its filing.

As a result, the OFS will remain restricted to the base offer size of 2%. The floor price for the OFS has been set at Rs 104 per share. The offer opened for non-retail investors on February 25, while retail investors can bid on February 26.

Institutional investors showed strong interest on the first day, placing bids for over 22.34 crore shares — about 94.98% of the 23.52 crore shares reserved for them. At an indicative price of Rs 104.12 per share, institutional bids were worth roughly Rs 2,326 crore.

Retail investors will participate in the share sale on Thursday.

As of December 31, the government held an 86.36% stake in IRFC. The company, which was listed in January 2021 at an IPO price of Rs 26 per share, has touched an all-time high of Rs 229.

The stake sale is part of the Centre’s broader divestment plan and its strategy to meet minimum public shareholding norms.

IRFC shares fell 5% to Rs 104.43 on the NSE on February 25, hovering close to the OFS floor price.