The government will begin the process of disinvesting up to 2% equity in Indian Railway Finance Corporation (IRFC) through an Offer for Sale (OFS), with bidding for non-retail investors opening on Wednesday and retail investors getting an opportunity to participate on Thursday.

The Department of Investment and Public Asset Management (DIPAM) announced the stake sale in a post on X on Tuesday. 

"Offer for Sale for Indian Railway Finance Corporation (IRFC) opens tomorrow for non-retail investors. Retail investors can bid on Thursday. Government offers to disinvest 1% equity in the IRFC along with an additional 1% as a green shoe option," DIPAM said.

The sale comprises a base offer of 1% equity in the railway financing company, with an additional 1% available under the green shoe option if demand remains strong.

Shares of IRFC ended Tuesday's session at Rs 98.37 apiece on the BSE, down 2.53%.

IRFC: Key financing arm of Indian Railways

Established on December 12, 1986, IRFC serves as the dedicated financing arm of Indian Railways, raising funds from domestic and overseas capital markets to support railway expansion and infrastructure development.

The Navratna public sector enterprise functions under the Ministry of Railways and is also registered with the Reserve Bank of India as a Systemically Important Non-Deposit Taking Non-Banking Financial Company and Infrastructure Finance Company.

Over more than three decades, IRFC has emerged as a key source of extra-budgetary resources for Indian Railways by borrowing from financial markets and financing the acquisition and creation of railway assets.

According to the company, the funds raised are primarily used for acquiring rolling stock and supporting railway infrastructure projects. IRFC has financed the acquisition of 13,764 locomotives, 76,735 passenger coaches, and 2,65,815 wagons, accounting for around 75% of Indian Railways' total rolling stock fleet.

Since 2011-12, the company has also expanded into funding railway projects, capacity enhancement works, and projects with forward and backward linkages to the railway sector.

IRFC has diversified its borrowing profile through taxable and tax-free bonds, bank loans, financial institution funding and offshore borrowings, helping it meet its annual funding requirements at competitive rates.