The Hindu Business Line : Overseas, domestic players keen on IFCI stake buy

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Overseas, domestic players keen on IFCI stake buy

K.R. Srivats

Interest sparked by prospect of 51 pc acquisition, management rights

New Delhi April 11 Overseas funds and institutions, as well as domestic entities, are showing heightened buying interest in IFCI so as to come on board as a "strategic investor" in the term-lending institution.

The prospect of acquiring up to 51 per cent stake along with management rights in the company might be an important factor for the surge in interest, said sources privy to the mandate given by IFCI to the Advisor, Ernst & Young.

Last month, IFCI had appointed Ernst &Young to advise it on the induction of a strategic investor in the company.

Although the expressions of interest (EoIs) are yet to be invited, six domestic and 7-8 foreign institutions and funds have already sounded out Ernst & Young that they are keen to participate in the EoI and information memorandum process. As on December 31, 2006, banks/financial institutions in all held 13.30 per cent, insurance companies 15 per cent, FIIs 10.27 per cent and mutual funds/UTI had 1.75 per cent in IFCI.

Individual shareholders in aggregate held about 45 per cent, while bodies corporate owned about 15 per cent.

The Central Government had no direct shareholding in IFCI. However, a number of entities/institutions with public sector character had holdings of over one per cent in the company.

Such entities/institutions include LIC (8.40 per cent), IDBI (6.56 per cent stake), Oriental Insurance Company (1.38 per cent), General Insurance Corporation (2.53 per cent), New India Assurance Company (1.40 per cent) and SBI (1.50 per cent).

To augment its resources, IFCI has, during calendar 2007, sold seven per cent stake in the NSE and eight per cent stake in ICRA.

The ICRA stake sale was through an offer for sale route. During the nine-month period ended December 31, 2006, IFCI reported net profit of Rs 229.39 crore on a total income of Rs 952.59 crore.

The company had registered a net loss of Rs 72.99 crore on a total income of Rs 904.86 crore during the same period in the previous year.

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