Indian Railway Finance Corporation Limited (IRFC) which had tapped the capital markets with its fresh issue and offer for sale was oversubscribed. The issue had opened on Monday the 18th of January and closed on Wednesday the 20th of January. The price band was Rs 25-26.

The total issue was for 178, 20,69,000 shares and comprised of a fresh issue of 118,80,46,000 equity shares and an offer for sale of 59,40,23,000 equity shares. The QIB portion was subscribed 3.78 times, HNI portion was subscribed 2.67 times, Retail portion was subscribed 3.66 times and Employee portion was subscribed a massive and unbelievable 43.76 times. There were 25.51 lac applications, which means that on the basis of forms the issue in the retail category was subscribed 2.35 times. The average size of application in retail category is surprisingly higher at 1.55 lots against the average of 1.20 lots.

Coming to the employee portion there were 84,15,700 shares subscribed for, which corresponds to Rs 21.88 crs. There is a ceiling of Rs 5 lacs per employee. This means that even if we are to assume that every employee of IRFC applied for the maximum of 5 lacs you would need IRFC to have a minimum of 437 employees. This company has just about 25 employees. Who therefore are these people who have applied for shares of IRFC in the employee category? The only people who could have done this under a wrong understanding could be employees of the Indian Railways. It is indeed unfortunate that people connected with the issue created a misunderstanding and would cause heartburn for all the people who applied for the issue under the employee category and would see their applications rejected under technical grounds.

Earlier the company had allotted 53,45,63,007 equity shares to 17 anchor investors comprising 31 entities. The highest allocation of 25.76% or 13.76 cr shares has been made to HDFC equity fund through 3 entities. This is followed by an allotment of 21.58% to Nippon India mutual fund who has subscribed through 5 funds. Government of Singapore comes next with an investment of 16.93% and an additional 4.15% taken by Monetary Fund of Singapore. Invesco is yet another fund who has picked up a reasonable stake of 13.67%, investing through as many as 12 funds.

The government issues never had an anchor allotment and this issue would be setting a new trend in the PSU issues. Looking at the business of the company and the anchors, it appears certain that the investors are looking for a steady state of returns and as a bonus on that, capital appreciation. Investors too, would have taken a cue from the same and invested accordingly.