IRFC OFS Falls Short: Govt's 2% Stake Sale Fails To Attract Full Subscription

On February 24, the Indian government attempted to divest a 2% stake in the Indian Railway Finance Corporation (IRFC) through an offer for sale (OFS) of over 26.13 crore shares at a floor price of Rs 104 per share. Despite the inclusion of a green shoe option, which allows for the sale of an equivalent number of shares, the offering did not meet the full subscription target. This shortfall highlights ongoing challenges in the government’s disinvestment strategy, which aims to bolster public finances by reducing its stake in various state-run enterprises. The OFS is part of a broader effort to attract private investment and increase market participation in the public sector, yet the lukewarm response raises questions about market conditions and investor sentiment towards government-owned entities. The IRFC, which plays a crucial role in financing the Indian Railways, has seen fluctuating investor confidence, reflecting broader economic trends and concerns regarding the fiscal health of public enterprises. The government must reassess its approach to disinvestment to ensure future offerings are more appealing to investors and achieve their financial objectives.