Indian Railway Finance Corporation (IRFC), IPO

The IRFC is the Ministry of Railways’ dedicated lending arm. It finances the acquisition and leasing of railway assets and provides financial services to various entities under the ministry. The Indian Railways and other government institutions are served by the corporation. Four of the five IRFC subsidiaries are listed at bourses. These include IRCON International Ltd. and Rail Vikas Nigam and Indian Railroad Catering and Tourism Corporation.

The IRFC provides financial support to the railways sector. It is a not-banking financial institution. Its main mission is to fund the MoR and railroads. Its lending activities are categorized into two major areas – rolling stock financing and railway infrastructure finance. The IRFC can also provide funds for entities other than the railway sector. This includes private businesses and governments. Despite the name, the IRFC offers a broad range of funding options.

The IRFC played a significant policy role in funding the railways. The ministry of railways (MoR) has assigned IRFC the task of providing institutional financing for infrastructure projects in India. IRFC has contributed about 45% of the capital expenditure of the Indian Railways in FY20 and FY21. The failure of the IRFC could result in IR losing its ability to finance capital expansion. This is a key area within the country’s economic growth plan.

In 2021, the IRFC will issue its first IPO. It will offer equity of up to Rs 9.000 crore in five-hundred shares lots. The issue price is Rs 14,950 per lot. Post-issue, the government will have an 86.4 percent share. The initial public offering will net the government an estimated Rs 3,243 crore. However, it will still retain its 13.6% stake. The company will now have a market capitalization of 23,845 million.

IRFC, a Schedule ‘A’ PSE that raises funds on the domestic as well as international markets is referred to. It funds rolling stock as well as railway infrastructure assets. As an infrastructure finance company, IRFC has been a major source of revenue for Indian railways. Investors looking for a way to earn money through the IPO are well served. It is more risky than the underlying companies, in fact.

The IRFC, a financial institution that is not bankable, acts as the Ministry of Railways’ specialized lending arm. The company lends to various entities under the MoR, including the railways. The company is based in New Delhi, India. Further, the IRFC’s mandate extends its services to other industries. This includes the leasing and purchase of rolling stock. This fund also lends non-deposit funding to other railway assets.

The IRFC has two primary business segments: the operating segment and the financial services division. Leasing railway assets is its main segment. Other operations of the company are in financing infrastructure projects. It also lends to other businesses. It also assists in the disposal of lease assets. It would mark the beginning of the 2021 calendar year with the IPO by the IRFC. The IRFC has undergone a restructuring process in 2016. The IPO process will take about four months.

The primary funding arm for Indian Railways’ is the IRFC. It’s principal objective is capital to support infrastructure and rolling stock. Its primary business is to raise funds from the financial markets. The IRFC successfully lent Rs.1.8 trillion in FY17 to the railway sector. By March 2018, its cumulative funding will reach Rs.2.4 lakh crore. The funds that IRFC raises are used to expand the railway network, which is a large portion of the IR capital expenditure.

The IRFC’s primary purpose is to provide funding to the Indian Railways through the financial markets. The principal amount of the leased property is payable in the initial 15 years. The cost of borrowing is adjusted for the fluctuating interest rates and other factors. Also, the nominal rate applies to the 15th-year lease period. Currently, about Rs.2 crore is managed by the IRFC in India’s infrastructure.