Government To Sell 5.36% Stake In RVNL via OFS

The government has decided to sell a 5.36% stake in Rail Vikas Nigam Ltd (RVNL) through an offer for sale, expected to fetch approximately Rs 1,329.90 crore. 

The President of India, acting through the Ministry of Railways, Government of India, is the promoter of Rail Vikas Nigam Limited. The promoter intends to sell a portion of its equity shares of the Company, totalling 70,890,683 shares, representing 3.40% of the Company’s total paid-up equity share capital. 

The offer for sale will be open on two specific dates which are July 27, for non-retail investors only, and July 28, 2023, for both retail investors and non-retail investors who wish to carry forward their unallotted bids. 

Additionally, the seller has the option to sell an additional 40,866,394 equity shares, amounting to 1.96% of the company’s total issued and paid-up equity share capital in case of oversubscription through a separate window on the BSE Limited and the NSE. If we sum up both, this will represent 5.36% of the company’s total issues. 

If the Oversubscription Option is exercised, the equity shares comprising both the Base Offer Size and the Oversubscription Option will collectively be called “Offer Shares.” However, if the Oversubscription Option is not exercised, the equity shares forming part of the Base Offer Size will be referred to as “Offer Shares.” 

The offer is being undertaken by the promoter to comply with the minimum public shareholding requirement in the company as mandated by the SEBI. The floor price for the offer shall be set at Rs 119 per Equity Share which would fetch approximately 1329.90 crore. 

IDBI Capital Markets & Securities Ltd and Elara Securities Pvt Ltd will be acting as the broker for the OFS on behalf of the seller. 

RVNL has yet to announce its financial results for the June quarter and is anticipated to release its first quarter results of FY24 soon. 

At the time of writing this article, the stock was trading at Rs 129.30. The trading began at Rs 125.50, showing a decline of 6.6% from the previous day’s closing price of Rs 134.35 on the BSE. 

Today, the stock is under pressure after the announcement of the Offer for Sale (OFS). Furthermore, the stock has demonstrated an impressive return of 318% over the last one year. 

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet, and is subject to changes. Please consult an expert before making related decisions.