IRFC lines up India’s first PSU NBFC IPO; public issue may open next week

By: |
December 7, 2020 12:07 PM

IRFC will enter the market to raise Rs 4,600 crore, which will be a mix of fresh issuance and an Offer for Sale (OFS) by existing investors.

IPO Market 2020It can be noted that recent media reports have suggested that the company, which also counts on Warburg's peers True North and GIC among its shareholders, is looking for an over Rs 1,000 crore initial public offering (IPO) sometime soon.

The IPO market might not be done for the year just yet. After the recently-closed Burger King’s public issue, the first PSU non-banking finance company (NBFC) IPO could be knocking on Dalal Street’s door this month. Indian Railway Finance Corporation’s (IRFC) Chairman and Managing Director stirred the pot over the weekend when he was quoted saying that the firm may launch its IPO by the third week of December if the market sentiment continues to stay positive. If not, then investors might have to wait for IRFC’s IPO till January, Amitabh Banerjee, Chairman and Managing Director, IRFC told PTI.

First PSU NBFC IPO

IRFC will enter the market to raise Rs 4,600 crore, which will be a mix of fresh issuance and an Offer for Sale (OFS) by existing investors. The issue will consist of a fresh issue of 118.8 crore shares and an OFS of 59.4 crore shares, according to the draft papers filed by the company. IRFC will utilise the funds from the fresh issue to augment equity capital base to meet its future capital requirements and for general corporate purposes. Prior to the issue, IRFC’s promoters — the Government of India — owns 938 crore equity shares, or 100% of the company.

Financially, IRFC has managed to grow its profits from Rs 921 crore in financial year 2017 to Rs 2,254 crore in financial year 2019. Revenue has increased on-year basis while margins have also been better every year. Amitabh Banerjee said that IRFC’s IPO — the first PSU NBFC public issue — is likely to open the doors for others to follow the same path. For IRFC’s IPO the government of India may also be considering anchor investors. “Indian Railway Finance Corporation happens to be one of the safest havens as far as investors are concerned,” Amitabh Banerjee said.

IPOs this year and ahead

The year 2020 has seen eleven debutants so far despite the tumultuous journey that the stock markets have charted. Of these eleven, ten stocks are currently trading at a premium to their issue price and nine are higher than the listing price of these stocks. Some of the most successful IPOs  this year have been Gland Pharma, Happiest Minds Technologies Ltd, Rossari Biotech, Route Mobile, and Chemcon Specialty chemicals.

Further, Kalyan Jewellers, Mrs. Bector’s, Nazara Technologies are some of the firms that too are eager to list their shares on the bourses, eyeing the liquidity that foreign investors have flushed the market with.

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