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Our Bureau

New Delhi, Oct 15

IFCI Ltd has decided to give 30 banks and financial institutions, including Life Insurance Corporation (LIC), an option to convert a portion of their debt exposure in the country’s oldest financial institution into equity.

The option is being given in respect of the Rs 1,479 crore worth of zero coupon optionally convertible debentures (OCDs) that was subscribed to by these entities as part of the overall restructuring package announced for IFCI in 2002. LIC had invested close to 35 per cent of Rs 1,479 crore OCD programme.

“They can exercise the option up to to a particular percentage of Rs 1,479 crore. The outer limit is 50 per cent. It will be lower than 50 per cent. By this, we will get more equity, which is good for IFCI”, Mr Atul Kumar Rai, Chief Executive Officer and Managing Director of IFCI, told reporters here.

He said that the remaining part of the debt under the debentures would be given interest that is available on 10-year Government securities. Currently, the OCDs do not carry any coupon rate and are convertible only in the year 2021-22.

Mr Rai made it clear that the option to convert into equity was being offered entirely at the behest of IFCI even as he admitted that the bidders for the proposed 26 per cent stake sale had sought clarity on the status of these OCDs. The conversion price would be as per the SEBI formula.

Meanwhile, IFCI plans to invite financial bids for the proposed 26 per cent stake sale within a week and expects to receive the bids within two months. Currently, eight bidders are in the fray for acquiring the 26 per cent stake, with Newbridge and Kotak Mahindra opting out of the race that got 10 bidders expressing interest to participate in the stake sale process.

On the Reserve Bank of India’s move to categorise IFCI as “systemically important non-deposit taking NBFC”, Mr Rai indicated that the provisions held in excess of requirement under the NBFC guidelines would be to the tune of about Rs 1,200 crore.

IFCI on Monday reported a net profit of Rs 744.15 crore on a total income of Rs 1,081.17 crore for the six months period ended September 30. The company had recorded a net profit of Rs 100.22 crore on total income of Rs 585.05 crore in the same period last year.

More Stories on : Financial Institutions | Restructuring | Life Insurance

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