Centre may sell stake in Rail Vikas Nigam through OFS this month

The government may sell its stake in Rail Vikas Nigam (RVNL) through an offer for sale (OFS) this month, according to a senior government official. The plan was delayed by a few months as the stock nosedived during the pandemic and was trading below its book value.

The stock of the public sector undertaking (PSU), which executes railway infrastructure projects, has recovered since, and hit a 52-week high of Rs 35.60 on January 11, 2021. Its shares ended at Rs 29.65 apiece on the BSE on Thursday, down 3.26 per cent.

In October 2020, the government had announced it would sell its 15 per cent stake in the company, and had invited proposals for appointment of merchant bankers to manage offloading the stake.

RVNL engages in railway projects that include railway electrification, setting up new lines, metro projects, major bridges, construction of cable stayed bridges and institution buildings, among others. A 15 per cent stake sale, including a greenshoe option, could fetch the government about Rs 990 crore.

 The step will also help the government move forward with meeting the minimum public shareholding norm, the official added.

The government holds 87.84 per cent in the company. The current norms mandate listed companies to have a minimum public shareholding of 25 per cent of their shares. The government last year had amended the Securities Contracts (Regulation) Rules, 1957, to give one more year to listed firms to meet the public shareholding criteria.

The sale would help the government achieve its Rs 32,000-crore divestment target for the current fiscal year. So far, the government has been able to garner Rs 21,303 crore through OFS, initial public offering, and other stake sales.