State-run Rail Vikas Nigam Ltd, a company created in 2003 for rail project development and mobilising financial resources, is seeking as much as Rs 3,950 crore (about $574 million) in valuation from an initial public offering this week with an increased issue size.
The government has set a price band of Rs 17-19 apiece, the company said on Tuesday. Retail investors will get a discount of Rs 0.50 on the price at which the shares are allotted.
At the upper end of the price band, the government will raise Rs 481 crore ($70 million). This is after the company increased the issue size to 253.45 million shares, or by an additional 2.12% stake, compared with 209.15 million shares it had proposed to sell at the time of filing the IPO draft prospectus.
The IPO, which is entirely a share sale by the government, will open on March 29 and close on April 3. The share sale is part of the government's disinvestment drive where the Centre will now offload 12.16% stake from 10% stake disinvestment proposed earlier.
After the IPO, the government’s holding will drop to 87.84% from 99.99%. Rail Vikas will get three years from the listing date to bring down the government's holding to 75% or below, as per the minimum public shareholding norms for listed companies.
The company had filed its draft prospectus in March last year and received regulatory approval to float an IPO two months later. The government was hoping to raise Rs 600-650 crore but may have lowered valuations owing to volatility in the market.
Yes Securities (India), Elara Capital (India) and IDBI Capital Markets & Securities are the merchant bankers for the IPO.
Rail Vikas Nigam
RVNL was incorporated in January 2003 by the railways ministry as a project execution agency to work for and on its behalf.
The company executes all types of railway projects including new lines, gauge conversion, railway electrification, metro rail projects, workshops and major bridges.
Since its inception, the ministry has transferred 179 projects to the company. Of these, 174 projects are sanctioned for execution. Of these, 72 projects have been fully completed and the rest are in progress.
The company had an order book of Rs 77,504.28 crore as on December-end 2018.
As on the end of 2016-17, the company claimed to have completed projects spanning 713.7 route kilometres.
Its key business operations are laying of new rail network lines, doubling of existing routes, gauge conversions, railway electrification, setting up metro lines and suburban networks in metropolitan cities, repair workshops, as well as construction of car sheds, bridges and subways.
RVNL’s major client is the Indian Railways. Other key clients include central and state ministries, departments and public sector undertakings.
The company reported a net profit of Rs 253.62 crore for the six months ended September 2018 on revenue (from operations) of Rs 3,622.88 crore for the period.
For 2017-18, the net profit was Rs 569.36 crore on revenue (from operations) of Rs 7,597.35 crore, as per its red herring prospectus.