Current Affairs 29 March 2019 Digest 3: Rail Vikas Nigam IPO opens; UNSC Resolution against terrorist funding
The Rail Vikas Nigam is offering its 25.34 crore shares at a price band of Rs 17 - Rs 19 per equity share. Investors need to apply for a minimum of 780 shares or more for bidding in the IPO process.
Story 1: Rail Vikas Nigam IPO opens: Key Takeaways
Miniratna Rail Vikas Nigam Ltd (RVNL) came out with its first Initial public offering (IPO) on March 29, 2019.
The state-owned company will not receive any proceeds from the offer as the Central Government is selling around 12 percent of its stake in the company. After the IPO, the Government's stake in RVNL will be pegged at 88 percent.
All you need to know about Rail Vikas Nigam’s IPO
• The Rail Vikas Nigam is offering its 25.34 crore shares at a price band of Rs 17 - Rs 19 per equity share.
• Investors need to apply for a minimum of 780 shares or more for bidding in the IPO process.
• Before offering the shares to public, the company reserved around 6.5 lakh shares for its eligible employees. The retail investors and employees who bid for the shares will get a discount in the IPO.
• The issue is expected to generate over Rs 481 crore.
• The IPO is being managed by Yes Securities (India) Ltd, Elara Capital (India) Private Ltd and IDBI Capital Markets & Securities Ltd.
• Alankit Assignments is the registrar to RVNL offer.
• The IPO will close on April 3, 2019. After the closing of IPO, the RVNL shares will be listed on the BSE and NSE and the trading will begin within six working days from April 3, 2019.
With this IPO, Rail Vikas Nigam will be the third rail PSU to be listed after RITES and IRCON International.
The RITES is a consulting arm of the Indian Railways, while IRCON is into project execution. Presently, RITES is trading above the IPO price, while IRCON is trading at 16 percent discount to the IPO price.
Rail Vikas Nigam Ltd (RVNL)
• The Rail Vikas Nigam Ltd is a Miniratna category Central Public Sector Enterprise (CPSE), incorporated by the Ministry of Railways in 2003 as a project executing agency.
• The company is responsible for executing various railway projects including new lines, doubling of lines, gauge conversion, railway electrification, metro projects, workshops and major bridges.
• The company is paid a consolidated management fee by the Indian Railways based on the annual expenditure incurred for the execution of projects.
• The company charges fixed fee of 9.25 percent for Metro Projects; 10 percent fee for National Projects and for other projects, it charges fees of 8.5 percent.
• It works on the ‘Asset-Light Model’ wherein the contractor provides all the machinery, plants and stores for execution of the project.
• Since the inception of the company, the Railways Ministry has transferred 179 projects to the company, of which, 174 projects were sanctioned for execution.
• So far, 72 projects have been fully completed totalling to Rs 20,567.28 crore and the balance projects are on-going.
• RVNL has an order book of Rs 77,504.28 crore as on December 31, 2018 which includes 102 ongoing projects.
• The company reported annual growth of over 33.74 percent in revenues during the financial years 2015-18.
• Pradeep Gaur is the current Chairman & Managing Director of the company.
What do you mean by Initial public offering (IPO)?
Initial public offering, also referred as stock market launch, is a process wherein an unlisted company declares itself public by issuing its shares to institutional investors and retail investors.
The process of IPO starts when the company hires an investment bank or banks to take care of the IPO.
After an IPO, the issuing company becomes a publicly listed company on a recognised stock exchange. The IPO leads to listing and trading of the company’s securities.
Story 2: UNSC passes Resolution to combat terrorist financing
The United Nations Security Council (UNSC) on March 28, 2019 unanimously passed the first-ever resolution to suppress the funding of terror groups worldwide.
Highlights of the Resolution
• The “Resolution 2462 on Countering the Financing of Terrorism” clearly states that all the member states shall make sure to establish laws and regulations that regard funding to terrorist groups or individual criminals a serious criminal offence.
• The resolution combines all the previous resolutions to create a consolidated document for strong collaboration and targeted efforts against terrorism.
• It also calls on members to create financial intelligence units.
• Member states that fail to implement the UNSC resolution would face UN sanctions.
The adoption comes at such a critical time when the recent terror attacks clearly demonstrate terror groups’ access to funding, be it legal or illegal. The latest example is the Pulwama terror attack wherein a suicide bomber killed an Indian army convoy of over 40 CRPF personnel in Jammu and Kashmir's Pulwama district on February 14, 2019.
At present, as per the FATF, two-thirds of Member States are not effectively taking legal action terrorist financing which includes construction, drug trafficking and even the trade of used cars.
Directions for UN Office of Counter-Terrorism (UNOCT)
The resolution directs the UN Office of Counter-Terrorism (UNOCT), set up in 2017, to implement global counter-terrorism strategy to play a leading role in identifying ways to suppress terrorist financing.
Vladimir Ivanovich Voronkov, Under-Secretary-General of UN Office of Counter-Terrorism identified three priority areas for the organisation to combat terrorism. These are:
• Expanding the focus of UNOCT to cover intelligence sharing, risk assessments and public-private partnerships
• System-wide awareness-raising and development of a comprehensive approach
• Work closely with the Financial Action Task Force (FATF), an inter-governmental body which sets standards for combating money laundering, terrorist financing and related threats to the integrity of international finance system.
About UN Office of Counter-Terrorism (UNOCT)
• The UN General Assembly on June 15, 2017 approved the establishment of the UN Office of Counter-Terrorism.
• The organisation was established by General Assembly resolution 71/291 to help Member States implement the global counter-terrorism strategy.
• Vladimir Ivanovich Voronkov of the Russian Federation was appointed as Under-Secretary-General of the office on June 21, 2017.
• The office works to enhance coordination across the 38 Global Counter-Terrorism Coordination Compact Task Force entities to ensure the balanced implementation of UN Global Counter-Terrorism Strategy.