The government is planning to disinvest part of its shares in the Indian Railway Catering and Tourism Corp (IRCTC) through an offer for sale (OFS). The share sale is part of government’s Rs 2.1 lakh crore disinvestment process for fiscal 2020-21.
The merchant bankers will have to submit their bids by September 10.
“The GoI intends to disinvest a part of the paid up equity capital of IRCTC out of its shareholding through ‘Offer for Sale’ (OFS) method of shares by promoters through the stock exchanges as per Securities and Exchange Board of India (SEBI) Rules and Regulations,” the tender document issued on Thursday said.
The government currently 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.
The tender further said that the government is also considering allotting shares to eligible and willing employees of the IRCTC at a discount to the issue or discovered price (lowest cut off price) up to a maximum of certain percentage of the OFS size, subsequent to completion of the transaction under OFS. The merchant banker will be required to undertake tasks related to all aspects of the OFS, including advising the government on the timing and the modalities of the OFS. It will also prepare the notice to be filed with the stock exchange and complete all stipulated requirements and formalities of regulatory and statutory authorities.
“Proposals under the guidelines are invited from reputed Category – I Merchant Bankers registered as such with SEBI and having valid license as stock broker in their name or in the name of their associate; either singly or as a consortium; with experience and expertise in public offerings in the capital; to act as Merchant Banker and to assist and advise the Government in the process,” it said.
The broking license is required to be valid until the completion of all activities relating to the OFS. Additionally, the Merchant Banker(s) or their associates would be required to act as “Selling Broker” for the proposed OFS.
IRCTC OFS will help the government inch forward 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.
So far in the current fiscal, the Department of Investment and Public Asset Management (DIPAM) has not been able to sell stake in any CPSE as the coronavirus outbreak has impacted equity markets. However, through Bharat Bond ETF-II, the government has garnered subscription worth Rs 11,000 crore for ‘AAA’ rated bonds of CPSEs.
DIPAM Secretary Tuhin Kanta Pandey had last month said restrictions on international travel due to COVID-19 pandemic have put brakes on strategic disinvestment of CPSEs, like Air India and BPCL, but completing the transactions remains a priority of the government.