Government to Sell Stake in RVNL via Offer for Sale (OFS) at Discounted Price

Indian govt offers discounted stake in Rail Vikas Nigam Ltd (RVNL) via OFS at Rs 119/share. Retail bidding opens Friday.

The Indian government has announced its plans to sell a stake of up to 5.36% in Rail Vikas Nigam Ltd (RVNL), a state-owned railway infrastructure company, through an Offer for Sale (OFS) at a floor price of Rs 119 per share. The proposed divestment, which will take place on Thursday, includes a 3.4% holding with an option to sell an additional 1.96% if oversubscribed.

In a disclosure filed with the exchange on Wednesday, the government revealed that it aims to raise approximately Rs 1,330 crore from the sale. Currently holding a 78.2% stake in RVNL, the government's move is part of its broader disinvestment strategy to mobilize funds for various developmental initiatives.

The OFS will be open for non-retail investors starting tomorrow, allowing them to participate in the sale. Retail investors will have the opportunity to bid on Friday, providing a level playing field for both institutional and individual investors.

It's noteworthy that the floor price of Rs 119 per share has been set at an attractive discount of over 11% to RVNL's closing price on the preceding Wednesday. This discount is expected to attract investors and boost demand for the shares during the offering.

The Department of Investment and Public Asset Management (DIPAM) Secretary took to Twitter to announce the details of the OFS. According to the tweet, the government is aiming to divest 5.36% equity in RVNL, and in the case of oversubscription, exercise the Green Shoe option of an additional 1.96% stake divestment.

The divestment initiative is part of the government's larger target to raise Rs 51,000 crore through disinvestment for the fiscal year 2023/24. So far, it has gathered Rs 4,230 crore through the sale of shares in other state-run firms. Notably, in May, the government successfully sold a 3% stake in Coal India, signaling its commitment to achieving the disinvestment goals.

RVNL has been instrumental in the development of rail infrastructure in India, undertaking various critical projects across the country. The company's strategic significance and growth prospects are expected to garner significant attention from investors during the OFS.

The sale of shares in RVNL provides a valuable opportunity for investors to participate in the growth story of India's railway infrastructure development while also supporting the government's disinvestment drive. With the discounted floor price, market participants will be closely watching the OFS to gauge investor sentiment and market appetite.

As the offering progresses, all eyes will be on the subscription numbers and the final amount raised through the stake sale. The outcome will not only determine the success of the RVNL OFS but also serve as a barometer for the broader disinvestment program's progress in achieving its fiscal targets.