Government considering selling stake in listed railway companies

The central government is looking to sell some of its shares in listed railway companies to raise money, three people apprised of the plans, at a time when the disinvestment target for the financial year looks out of reach.

The railway ministry has asked public sector companies under its purview to consider whether they can sell fresh shares to raise capital, the government is also selling some of its shares, the people mentioned above asked anonymity. Said on condition. The move comes after the cabinet recently granted more freedom to the boards of central public sector undertakings to pursue stake sale.

Depending on market conditions, bluechip railway companies such as Indian Railway Construction Ltd, Rail India Technical and Economic Services Ltd, and Rail Vikas Nigam Ltd may be among the first to sell the shares, but other listed entities such as RailTel Corp of India Ltd., Indian Railway Catering and Tourism Corporation Ltd. (IRCTC) and even Indian Railway Finance Corporation Ltd. (IRFC) could explore possibilities, said one of the three people mentioned above.

With only five months left in the financial year, Life Insurance Corporation of India’s public listing and offers for sale of some companies have collectively increased. 24,543.67 crore, very less 65,000 crore disinvestment target for FY23.

Six Railway PSUs went public in the last three to four years, with the government’s stake ranging from 67% in IRCTC to over 86% in IRFC. The people mentioned above said that the government can sell up to 10% of its stake through a market offer. At current market prices, the sale of 10% in all the six PSUs would yield approx. 12,000 crores.

Queries sent to the Ministries of Finance and Railways remained unanswered till press time.

The second person said that the boards of these companies are expected to discuss and finalize the plans soon, but the timing of such issues will depend on the market conditions. “The railways has not yet decided to start listing and disinvestment of stake in other PSUs such as Dedicated Freight Corridor Corp of India, Konkan Railway Corp and Mumbai Rail Vikas Corp, a decision that will be taken later,” the person said.

The third person said the boards of CPSEs were recently empowered to decide on minority stake sale, strategic disinvestment and sale of their subsidiaries as well as sale of their stake in joint ventures. CPSEs can send such proposals to the respective ministries, which then recommend it to the Department of Investment and Public Asset Management (DIPAM), which then proposes it to an empowered group of ministers with a so-called alternative mechanism—central roads and highways. Is. Minister Nitin Gadkari, Finance Minister Nirmala Sitharaman and Minister of Administrative Department or concerned Ministry for in-principle approval. After approval, the CPSE is directed by the concerned ministry to undertake the transaction.

DIPAM last month outlined rules for CPSEs to conduct various transactions, including strategic sale with transfer of management control or privatization, structuring of core and non-core assets, roadshows to gauge bidder interest Includes due diligence, including security, addressing pre-bid questions. Completion of transactions through approval of qualified bidders, transparent and competitive bidding and share purchase agreement and transfer of shares.

The procedures are similar to those currently being undertaken by DIPAM for disinvestment of CPSEs, including strategic disinvestment with or without transfer of management control and offer of sale for minority stake sale. In case of sale of stake in a CPSE to a State or any other Central or State PSE with or without management control, the approval of the alternative mechanism shall be sought at the time of taking in-principle approval after giving sufficient justification.