The initial public offering of Rites, a state-owned company under the ministry of railways, will open on June 20.
Rites, which provides transport infrastructure consultancy and quality assurance services in India and abroad, proposes to raise Rs 466 crore by divesting 12.6 per cent stake in a price band of Rs 180-185 per share of Rs 10 face value. Retail investors and employees will be offered a discount of Rs 6 per equity share.
Rites, earlier known as Rail India Technical and Economic Service, is an engineering consultancy established in 1974 by the government of India. The company's initial charter was to provide consultancy services in rail transport management to operators in India and abroad. Rites has since diversified into planning and consulting services for other infrastructure, including airports, ports, highways and urban planning.
The Rites IPO comprises of 2.52 crore shares, of which 12 lakh are reserved for employees. The net public offer is of 2.40 crore equity shares. From this 50 per cent are reserved for the qualified institutional buyers, 35 per cent for retail investors and 15 per cent for non-institutional investors. The IPO will close on June 22.
Rajeev Mehrotra, chairman and managing director, Rites, while announcing the details of the IPO, said, “Rites is a debt-free company and the company has about Rs 1,500 crore of cash on its balance sheet. In recent times metro rail projects has come as a good growth area, with Rites involved in Delhi Metro and Bangalore Metro in the past and currently having work order from Ahmedabad and Pune Metro projects.”
The company has also bagged metro rail project in Mauritius.
“The current order book of Rites is about Rs 4,818 crore,” Mehrotra said.
The proceeds from the IPO will go to GoI and not to the company. This will be the first divestment of a public sector enterprise in FY18-19. GoI has set a divestment target of Rs 80,000 crore for the current fiscal. Elara Capital, IDBI Capital Markets & Securities, IDFC Bank and SBI Capital Markets are the book running lead managers to the public issue.