Govt to sell 5.3% stake in RVNL; stock falls 5%

The Union government has said it will divest a 5.36% stake - including a green shoe option of 1.96% - in railway public sector enterprise Rail Vikas Nigam Ltd (RVNL). The offer for sale opens on July 27.

"Offer for sale in RVNL opens tomorrow for non-retail investors. Retail investors can bid on Friday," the Department of Investment and Public Asset Management says in a tweet.

The government proposes to sell up to 70,890,683 equity shares of the company, representing 3.4% of the total paid-up equity share capital on July 27, 2023, for non-retail investors and on July 28, 2023, for retail investors, the PSU says in a stock exchange filing.

While placing their bids, non-retail investors may indicate their willingness to carry forward their un-allotted bids to T+l day for allocation to them in the unsubscribed portion of the retail category, the filing says.

On July 28, non-retail investors can choose to carry forward their un-allotted bids, with an option to additionally sell 40,866,394 equity shares - representing 1.96% of the total issued and paid-up equity share capital of the company - through a separate designated window of the BSE and the National Stock Exchange, collectively representing 5.36% of the total issued and paid up equity share capital of the company.

"Such non-retail investors can also revise their bids on T+l day in accordance with the offer for sale guidelines. Any unsubscribed portion of the non-retail category after allotment shall be eligible for allocation in the retail category. The allocation to the non-retail investors shall be at a price equal to the cut-off price or higher as per the bids," the filing says.

A minimum of 25% of the offer shares will be reserved for mutual funds and insurance companies. In the event of any under-subscription by mutual funds and insurance companies, the unsubscribed portion will be available to other bidders in the non-retail category.

Reacting to the announcement, shares of RVNL, the infrastructure arm of the Ministry of Railways, fell 5% to ₹126 on the NSE on Thursday. The multi-bagger stock has risen around 300% in the last 12 months, rebounding from its 52-week low of ₹29 touched on June 21, 2022. On the year-to-date (YTD) basis, the counter has gained nearly 87%.

In April, the Department of Public Enterprises granted the ‘Navratna’ status to the PSU. RVNL is the 13th Navratna firm among the Central Public Sector Enterprises (CPSEs). CPSEs are allowed to invest up to ₹1,000 crore without seeking approval from the government. On April 29, the company informed the exchanges that it secured two orders worth ₹3,278 crore, one from Madhya Pradesh Poorv Kshetra Vidyut Vitran and the other from Chennai Metro Rail Limited (CMRL).