The Indian Government To Sell 15-20% Stake In IRCTC Via Offer For Sale (OFS)

• The Indian government is looking to sell a 15-20% stake via offer for sale (OFS).
• On September 30, 2019, IRCTC launched its IPO and was oversubscribed by 112 times.
• DIPAM had invited bids from merchant bankers by September 10 for managing the sales of IRCTC stakes.

According to the latest reports, The Indian government is looking to sell a 15-20% stake in IRCTC via Offer for sale (OFS) and would like to complete the transaction into a smaller number of portions.

On September 30, 2019, The Indian government decided to raise fundings from the private sector to improve the infrastructure of the e-ticketing system platform IRCTC.

The company raised around Rs645 crores from the IPO. After the launch of the IRCTC IPO, it was oversubscribed by 112 times.

Now, The Indian government is looking to sell a 15-20% IRCTC stake via offer for sale.

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Furthermore, DIPAM (Department of Investment and Public Asset Management) had invited bids from the merchant bankers by September 10 for managing the sale of the IRCTC stake.

Earlier this month, 4th September, DIPAM held a pre-bid meeting for the sale of the IRCTC stake with the potential buyers.

DIPAM has posted some queries response from the potential buyers on its website. Here are some of the queries raised by the buyers:

1. The issue size has not been mentioned on the RFP. When will the
   issue size be determined?

2. Part 2(C) with respect to the proposed divestment. Is the full 12.4%
expected to be offered in the OFS.

DIPAM Response - The indicative percentage is 15% to 20%. The exact details will be shared with the selected Merchant Bankers.

3. Under Clause 6.4 Section (C) Point (III) mentions as “Public
Offerings handled between 01.01.2017 to 30.06.2020 ……….”, whereas
in Clause 5.1 eligibility criteria mentioned the period as 01.04.2017 to
30.06.2020. Likewise, Annexure 1 carries the period 01.01.2017 to
31.12.2019. Would request clarification on this.

DIPAM Response - Under Clause 6.4 Section (C) Point (III) and Clause 5.1 the time period should be read from 01.04.2017 to 30.06.2020

4. Is there a separate certificate expected for “Willingness of the
broker to act as a selling broker for the OFS transaction”? Is there a
specific format for the same?

DIPAM Response - NO

Currently, the Indian government holds 87.40% stake in the IRCTC. And to to meet the SEBI's rule the government has lower its stake to 75% in the company.

IRCTC OFS would help the government inch forward towards meeting the ₹2.10 lakh crore disinvestment target for the ongoing fiscal.

Of this, ₹1.20 lakh crore is to come from disinvestment of public sector undertakings and ₹90,000 crores from stake sale in financial institutions.

However, DIPAM has not been able to sell stake in any CPSE so far in the current fiscal as the coronavirus outbreak has impacted equity markets.

However, the government has garnered subscription worth ₹11,000 crores for 'AAA' rated bonds of CPSEs through Bharat Bond ETF-II.

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