The Hindu Business Line : Nothing to fear, Govt tells IDFC's foreign shareholders

THE IDFC boat is steering itself into calmer waters with the Ministry of Finance assuring foreign institutional shareholders that there was no proposal for a merger of the company or any alteration in its character as a private sector entity.

Senior officials of the Ministry said that the feedback received from the foreign shareholders on being explained the Government's stand suggested that they would not make any moves to exit the company, which would create any fresh instability.

"Foreign equity holders had been approaching us on the recent developments. We have clarified our position to them and they have expressed satisfaction with our explanation. They would remain with as shareholders in the company," a top official said.

A clutch of foreign shareholders hold a total 40 per cent of IDFC's paid-up capital of Rs 1,000 crore. They include Asian Development Bank (ADB), International Finance Corporation (IFC), CDC Finance Services (Mauritius), Kendall Holding Ltd, Deutsche Asia Pacific Holding Pte Ltd, State Secretariat for Economic Affairs, Switzerland, BNL International Investment SA, and SLAC Mauritius Holding Ltd.

Of the remaining equity, 40 per cent is shared between the Government (20 per cent), the Reserve Bank of India (15 per cent) and IDBI (five per cent).

Banks and institutions - including ICICI Bank, SBI, HDFC, UTI and IFCI - hold the rest.

The Government has explained to the foreign shareholders that IDFC would retain its current private sector status and that there would be no move to merge it with SBI.

Moreover, it has also been decided that the RBI's 15 per cent holding in the company would be transferred to the Government and no more of the shares to any other party in the near future.

Developments in IDFC had created a flutter recently with news coming in that several bigwigs, including the Managing Director, Mr Nasser, had tendered their resignation to thwart an allegedly Government-sponsored move to make the company an SBI subsidiary through an arrangement of share transfer.

However, as things stand now, the Government is moving towards strengthening the company by making it the secretariat for the proposed Rs 50,000-crore infrastructure fund.

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