The Hindu Business Line : IDFC to offer 30 pc of stake to public

IN a move to give an exit option to its stakeholders, IDFC ( Infrastructure Development Finance Company) has announced its decision to come out with an IPO in January 2005.

IDFC's board of directors, which met in New Delhi, approved the proposal for an IPO by way of offer for sale, on a pro-rata basis, by existing shareholders to the extent of 30 per cent of its capital base.

With its initial paid-up capital of Rs 1,000 crore and the Rs 650 crore contributed by the Government with RBI, by way of subordinated debt, IDFC's total capital base is currently Rs 1,650 crore.

The board appointed merchant bankers and legal advisers apart from constituting a committee of directors to facilitate and monitor the process.

In fact, IDFC was to have taken a decision on giving exit options to its stakeholders within the first six years of its operation, as per the original shareholder agreement. In other words, IDFC was to have come out with the option in January this year. At that time, the company was exploring the option of either an IPO or the possibility of some of the existing shareholders buying out the stakes of other equity holders.

However, the proposal got delayed with IDFC getting bogged down by certain developments such as the proposal to merge it and IL&FS (this did not materialise) and a reported move by the Government to take RBI's 15 per cent holding in IDFC and have it transferred to State Bank of India.

While the Government holds 20 per cent stake in IDFC, RBI has 15 per cent and Industrial Development Bank of India another 5 per cent. Domestic financial institutions hold 20 per cent stake, including ICICI Bank (six per cent), SBI (six per cent) and HDFC (three per cent), while foreign investments have the remaining 40 per cent, including Asian Development Bank (6.1 per cent), CDC Financial Services (Mauritius) Ltd (6.1 per cent) and International Finance Corporation (6.1 per cent).

In 2003-04, IDFC recorded the highest annual approvals and disbursements of Rs 5,726.90 crore for 81 projects and Rs 2,704.10 crore for 59 projects.

On a cumulative basis, IDFC's gross approvals have risen to Rs 18,200 crore (for 156 projects) and gross disbursement to Rs 6,900 crore (for 87 projects).

As on March 31, IDFC's total exposure to infrastructure projects, including performance and financial bank guarantees was Rs 9,754 crore.

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