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Our Bureau

New Delhi, Dec 18

A committee of directors of IFCI Ltd has decided to issue about 12.374 crore new equity shares at a price of Rs 107 per share (including premium of Rs 97 per share) to public sector banks and financial institutions (FIs). These shares are to be issued towards the conversion of zero coupon optionally convertible debentures (ZCOCDs) amounting to Rs 1,323.99 crore held by various public sector banks and FIs.

On the matter of induction of strategic partner, IFCI said on Tuesday that no final decision has yet been taken by its board on the issue even as sources said that Sterlite-Morgan Stanley combine had emerged as the front runner to pick up 26 per cent stake in the country’s oldest financial institution.

“A decision on a large investment running into hundreds of crore cannot happen just like that without sorting out various issues. The board met on Monday evening and the meeting ended at about 6.00 a.m on Tuesday. It is likely that a decision could come about in a day or two after the board meets again,” an IFCI official said.

Sources maintained that pricing was not the bone of contention for a decision on the deal and that there were other issues.

Ernst and Young India is advising IFCI on the deal.

Of the total amount of Rs 1,323.99 crore of ZCOCDs to be converted into equity shares of IFCI, about Rs 900 crore of debentures are held by public sector banks and about Rs 400 crore with financial institutions, including insurance companies.

In the case of insurance firms, IFCI had decided to convert about Rs 400 crore of the Rs 579-crore OCDs issued to such firms so that they maintain their holding at 13 per cent even after allotting a 26 per cent stake to the new strategic partner.

With the proposed conversion, public sector banks’ stake in IFCI is expected to be over 25 per cent, taking the total holding of Government-controlled firms to over 38 per cent. Besides banks and insurance companies, the Government was also issued Rs 923 crore of such OCDs. However, the Government has now decided not to opt for conversion of the OCDs into equity.

More Stories on : Corporate Bonds | Financial Institutions

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