The Hindu Business Line : Scramble for IFCI stake

It is a moot point whether a healthy institution would generate this kind of interest. We are referring to the kind of interest that troubled institutions or those who have recently been in difficulties seem to generate among prospective suitors.

This was witnessed in the recent past, about a year ago, when the ailing United Western Bank had as much as 12 suitors lining up to pick up stakes in that bank - before IDBI became the chosen one.

Now, IFCI has 10 bidders scrambling to pick up a 26 per cent stake in this institution. These bidders, who represent every major lender and interest, are obviously eyeing IFCI’s real estate assets. IFCI has been through a painful process of pruning down its non-performing assets for the last few years. The sale of its stake in some institutions such as NSE and ICRA has provided it some cushion in the recent past.

The current regulatory regime limits branch licenses for foreign banks. Most foreign banks would not be able to get more than three or four branches each. With the sector set to open up in two years, the authorities are preparing the ground for consolidation in the financial sector.

Although there are indications of a temporary slowdown in credit growth, this is still one of the fastest growing economies in the world. A foothold in this financial institution will come of considerable use for these bidders. The stock has already run up to touch its 52 week high. With the pedigree of potential suitors being known, there is likely to be sustained interest in this stock.

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