RailTel Corporation IPO: Grey market premium, price band among key things you should know before subscribing

State-owned RailTel Corporation of India is set to launch its initial public offering (IPO) for subscription on February 16. The issue will close on February 18 and equity shares are expected to list on the BSE and National Stock Exchange of India on February 26

ICICI Securities, IDBI Capital, SBI Capital Markets are merchant bankers to the issue.

Here are the key things to know about RailTel IPO:

About the company: The company was incorporated in the year 2000 to modernise the existing telecom system for train control, operation and safety and to generate additional revenues by creating nationwide broadband and multimedia network, laying optical fibre cable using the right of way along railway tracks.

The mini-ratna PSU is one of the largest neutral telecom infrastructure providers in the country owning an optic fibre network on exclusive Right of Way (RoW) along the railway track. The company provides broadband telecom and multimedia network across the country. As on June 30, 2020, its optic fibre network covers over 55,000 km and 5,677 railway stations across towns and cities in the country.

About the issue: The initial public offer (IPO) is entirely an offer-for-sale through which government will offload 87,153,369 equity shares, amounting to 27.16% stake. At the upper end of the price band, the government would raise a little over Rs 819 crore. The anchor investors portion would be open for subscription on February 15. In December 2018, the cabinet had approved IPO of RailTel Corporation by diluting up to 25 per cent government stake.

Quota for retail investors: As much as 50% of the issue is reserved for qualified institutional buyers (QIB), 35% for retail investors and 15% for non-institutional bidders.

Object of the offer: The objects of the public offer are to carry out the disinvestment of 87,153,369 equity shares held by the selling shareholder and to achieve the benefits of listing the equity shares on the stock exchanges. The government will raise around Rs 819 crore at upper price band through the public offer.

Price band: The company has fixed a price band of Rs 93-94 per share for its initial share sale.

Grey market premium: Ahead of the IPO, the premium of RailTel soared around 45% in the unlisted market against the issue price of Rs 94 per share.

RailTel IPO lot size: Retail investors can bid for a minimum lot of 155 equity shares and in multiples of 155 shares thereafter. They can apply for up to 13 lots (2015 shares or Rs 189,410).