IRFC IPO opens: 5 things you need to know before subscribing

The Rs 4,633-crore Indian Railway Finance Corporation (IRFC) initial public offer opened today for subscription.

IRFC, a public sector undertaking under the railway ministry, is offering up to 178.2 crore shares of face value of Rs. 10 each. The IPO includes a fresh issue of up to 118.8 crore shares (fresh issue) and an offer for sale of up to 59.4 crore equity shares by the President of India, acting through the Ministry of Railways.

According to CNBC, the IPO of IRFC was subscribed 33.7 percent on the first day of bidding.

Here 5 things one should keep in mind before subscribing:

1. The initial public offer (IPO) would open on January 18 and close on January 20. The price band of the issue has been fixed at Rs 25 to Rs 26 per equity share. According to the company's statement, bids can be made for a minimum of 575 shares and in multiples of 575 thereafter. The offer is 50 per cent reserved for Qualified Institutional Buyers; 15 per cent for Non-Institutional Investors; and 35 per cent for Retail Individual Investors.

2. What is the issue size of the IPO? The issue is of up to 178.20 crore shares, comprising a fresh issue of up to 118.80 crore shares and offer for sale of up to 59.40 crore shares by the government, according to the draft prospectus.

3. DAM Capital Advisors, HSBC Securities and Capital Markets (India), ICICI Securities and SBI Capital Markets are Lead Book Running Managers of the issue.

4. According to the company's statement, the issue includes a reservation aggregating to Rs 50 lakh for subscription by eligible employees and the issue less employee reservation portion is referred to as the net issue.

5. The net proceeds from the fresh issue are proposed to be utilised for augmenting the company's equity capital base to meet their future capital requirements arising out of growth in their business; and for general corporate purposes.

IRFC, set up in 1986, is a dedicated financing arm of the Indian Railways for mobilising funds from domestic as well as overseas markets. Its primary objective is to meet the predominant portion of 'extra budgetary resources' requirement of the Indian Railways through market borrowings at the most competitive rates and terms.

The Union Cabinet had in April 2017 approved listing of five railway companies. Four of them -- IRCON International Ltd, RITES Ltd, Rail Vikas Nigam Ltd and Indian Railway Catering and Tourism Corp -- have been listed.

(Inputs from PTI)

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