IRFC Share Price Down As India Divests Up to 4% Stake via OFS

The share price of the Indian Railway Finance Corporation (IRFC) dipped on Wednesday as the nation’s central government divests a portion of its holdings in the company via offer for sale (OFS).

OFS to Achieve Minimum Public Shareholding 

An offer for sale is a stock exchange mechanism that allows large shareholders to sell their holdings directly to the public. The Indian government held 86.36% in IRFC as of the December quarter, or 11.36% above the 75% minimum public shareholding requirement. Offloading the excess shares will allow the government to comply with the norms. 

“The Offer is being undertaken by the Seller, inter alia, for achieving the minimum public shareholding in the Company,” the  security exchange filing on the OFS submitted dated February 24 stated. ”The Offer is being made in reliance on the OFS Guidelines. There will be no “public offer” of the Offer Shares in India under the applicable laws in India including the Companies Act, 2013, and the rules and clarifications issued thereunder, as amended from time to time (the “Companies Act”) or in any other jurisdiction.”

The plan is to sell up to a 2% stake in IRFC with an option to divest another 2% if the demand is high. This translates to divesting more than ₹26.13 crore of equity shares with an option to offload an additional ₹26.13 crore in shares in case of oversubscription. The floor price has been fixed at  ₹104 per share.

IRFC Down on Day 1 of OFS

The OFS opens for non-retail investors on Wednesday and for retail investor investors on Thursday.

The share price of IRFC dropped on the first day of the OFS, plunging to a low of ₹104.82 early in the session. At time of writing, the stock is trading for  ₹105.12, down by 3.95% from the previous close of ₹109.44.