State-run shipbuilding and maintenance company Cochin Shipyard Ltd is seeking a valuation of Rs 5,872.43 crore ($911.72 million) via an initial public offering that begins next week.
The company has set a price band of Rs 424-432 per share for the IPO, it announced during a press meet on Tuesday.
Cochin Shipyard aims to raise roughly Rs 980 crore via a fresh issue of shares while the government, acting as the sole selling shareholder, is expected to fetch the rest.
The IPO, which does not have an anchor book, will open on 1 August and close two days later.
The public offering comprises a fresh issue of 22.65 million shares, besides an offer-for-sale of 11.32 million shares by the government, as per the company's draft red herring prospectus (DRHP).
Overall, the IPO will result in a stake dilution of 25% on a post-issue basis. Of this, the government will divest 10% stake in the firm, says the DRHP. This will help the company comply with the Securities and Exchange Board of India's (SEBI) norm of 25% minimum public float.
Cochin Shipyard had filed its DRHP on 24 March, and it received regulatory approval on 20 April.
Its IPO is part of a record disinvestment target set for the forthcoming financial year by finance minister Arun Jaitley.
The government is aiming to raise a record Rs 72,500 crore through capital receipts that comprise minority sales and strategic disinvestments as well as listing of state-owned companies, including insurance firms. This surpasses the Rs 69,500 crore previously targeted by the government.
In the first three months of this fiscal, the government has been able to mobilise roughly Rs 6,700 crore by selling minority stakes in half-a-dozen companies.
Last month, it sold a 2.6% stake in engineering giant Larsen & Toubro Ltd—held via Specified Undertaking of The Unit Trust of India—for Rs 4,158 crore. It also offloaded 10% stake via an IPO in housing and urban infrastructure financier Hudco Ltd.
To meet its ambitious target, the government has identified about two dozen firms—listed and unlisted—for divestment. Apart from a record fund-raise, this pipeline could help it meet its fiscal deficit target for the first time in a decade.
The government is looking to raise about Rs 25,000 crore by selling its stake in NTPC Ltd, Indian Oil Corp Ltd (IOCL), Power Finance Corp Ltd, and NHPC Ltd, besides lining up maiden offerings of state-owned insurance firms The National India Assurance Co Ltd (NIA) and General Insurance Corp of India (GIC Re), which could fetch an additional Rs 12,000 crore.