Government sells 10% stake in RITES Ltd, collects ₹729.44 crore from disinvestment

The government has sold its 10% stake or 2.5 crore equity shares in its railway engineering consultancy company, RITES Ltd through the Offer-For-Sale (OFS) route and has collected ₹729.44 crore.

“Government undertook offer for sale for 10% of paid-up equity in RITES on 22-25 November 2019. The base offer was fully subscribed (100.01%) with disinvestment proceeds of ₹729.44 crore," secretary of department of investment and public asset management (DIPAM) said on the micro-blogging and social networking website Twitter on Tuesday.

The government had proposed selling 10% stake in the company on 22 November to non-retail investors only and on 25 November to retail investors and non-retail investors, with an option to additionally sell up to 1.25 crore equity shares, representing 5% stake, through the offer-for-sale route. The shares of the company slumped nearly 8% in the past three sessions post the government’s decision to divest its stake in the company.

The floor price for the OFS was set at ₹293.50 per share. Retail investors were to be allocated shares at a discount of 5% to the cut-off price.

As on 30 September, the government owned 87.4% stake in RITES, the only export arm of Indian railways for providing rolling stock overseas.

Proceeds from the transaction will take the government closer to its divestment target of ₹1.05 trillion for the current financial year, higher than the target of ₹90,000 in 2018-19.