State-owned Indian Railway Catering and Tourism Corporation (IRCTC) after discussion with merchant bankers has set the price band for its initial public offering at Rs 315-320 per share.
Through the IPO, set to open for subscription on September 30 and close on October 3, the government hopes to raise between Rs 635.04 and Rs 645.12 crore.
The IPO comprises of an offer for sale of 2 crore shares (representing 12.50 percent of total paid-up equity) by the Ministry of Railways. There would also be additional employee reservation portion of 1.6 lakh shares, taking the total offer size to 12.6 percent of total paid-up equity.
As it is an offer for sale issue, IRCTC will not receive any proceeds from the offer and all proceeds will go to the selling shareholder.
IRCTC provides catering services to railways, online railway tickets and packaged drinking water at railway stations and trains in India.
The minimum bid lot is 40 equity shares and in multiples of 40 equity shares thereafter.
The retail investors and employees will get shares at a discount of Rs 10 per share to final offer price.
IDBI Capital Markets & Securities, SBI Capital Markets and Yes Securities (India) are the book running lead managers to the issue.
The stake sale in IRCTC is a part of the government's full-year divestment programme set in Budget 2019.
In July, Finance Minister Nirmala Sitharaman had set a disinvestment target of Rs 1.05 lakh crore for FY20, up from Piyush Goyal's interim Budget target of Rs 90,000 crore. The IRCTC IPO is part of the same disinvestment programme.
In April, another railway entity Rail Vikas Nigam (RVNL) was listed. The government had raised about Rs 480 crore via the 12.2 percent stake sale in RVNL.
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