State-owned railways consultant RITES Ltd is seeking Rs 3,700 crore ($550 million) valuation in its initial public offering (IPO) next week from June 20-22.
RITES, which is wholly-owned by the government, has set a price band of Rs 180-185 apiece, resulting in an IPO size of Rs 466.20 crore at the upper end of the range.
Retail investors and eligible employees will get Rs 6 discount on the price at which shares are allotted.
The IPO will comprise of a sale of 25.2 million shares by the government, including stock reserved for the employees.
RITES’ public issue will result in 12.6% stake dilution by the government, which will get three years from the date of listing to bring its stake to 75% or below.
VCCircle had, in June last year, reported that the government had hired merchant bankers for various state-owned companies including RITES.
The share sale of RITES is part of the government’s disinvestment target for the current financial year.
VCCircle had previously reported that the government was the biggest beneficiary from the IPO boom in 2017. The government took four state-run companies public. In all, the government raised about Rs 21,118 crore, besides selling stakes in listed firms.
Elara Capital, IDBI Capital Markets, IDFC Bank and SBI Capital Markets are merchant bankers managing the RITES’ IPO.
RITES was incorporated in 1974 under the ministry of railways. The company is in the business of transport infrastructure consultancy for the railways, besides providing consultancy across other sectors such as urban transport, roads and highways, ports, inland waterways, airports, institutional buildings, ropeways, power procurement and renewable energy.
The firm has been operating for 43 years and has undertaken projects in over 55 countries in Asia, Africa, Latin America, South America and West Asia (the Middle East).
It is an export arm of Indian Railways that provides rolling stock overseas.
The company also engages in leasing, export, maintenance and rehabilitation of locomotives and rolling stock, besides undertaking turnkey projects on an engineering, procurement and construction (EPC) basis for a variety of railway-related projects, both with or without equity participation.
The company is also into wagon manufacturing, renewable energy generation and power procurement for Indian Railways through collaborations by way of joint ventures, subsidiaries or consortiums.
RITES’ caters to a list of clients in various central and state government ministries, departments, instrumentalities as well as local government bodies and public sector undertakings.
The company posted consolidated net profit of Rs 252.5 crore for nine months ended December 2017 on consolidated revenue (from operations) of Rs 936.15 crore, going by its red herring prospectus.
Its revenues for 2016-17 and 2015-16 stood at Rs 1,353.8 crore and Rs 1,090.5 crore, respectively. The company posted net profits of Rs 361.66 and Rs 282.51 crore, respectively, for 2016-17 and 2015-16, information made available in the RHP showed.