The initial public offering (IPO) of railway PSU IRCON International will hit the market on September 17 or 18. Around 1 crore equity shares of the face value Rs 10 each will be on offer.
While the government plans to divest 10% of its stake in the construction company via the IPO, employees will be offered around 5 lakh equity shares over and above of what is available for the public. The IPO is likely to fetch the government Rs 500-600 crore.
IRCON International was incorporated in 1976 by the government and the firm specialises in railway and highway construction, EHP sub-stations and mass rapid transit systems. While the company has so far completed around 300 infrastructure projects in India and more than 100 projects overseas, its overseas portfolio has gone down of late. “Three years back, almost 50% of the company’s turnover used to come from abroad. Now, that share has gone below 10%,” said a source.
The firm executed projects in Malaysia, Nepal, Bangladesh, Mozambique, Ethopia, Afghanistan, Algeria, Sri Lanka and the UK. According to the source quoted above, IRCON is competing for projects in Malaysia and Sri Lanka.
The IPO will contribute towards the government’s disinvestment target of Rs 80,000 crore. So far this year, the government has raised Rs 9,220 crore, or less than 10% of the annual target. The poor disinvestment performance is partly because the government’s plan to sell Air India did not fructify.
The government is expecting the IPO to do well on the stock exchanges as the response from investors was good during the road shows, the source said.
This will be the second railway PSU to be listed in this financial year after RITES was listed in July wherein 2.52 crore equity shares were offered and the government received around Rs 460 crore. The other railway PSUs in line to be listed include IRFC and RVNL, whereas IRCTC has been put on hold as the business model of the company got affected as it stopped charging service charge from consumers as per the government’s direction post demonetisation.