Once this process is over, IFCI is likely to issue fresh shares to strategic investors to give it at least 26 per cent stake. "The board met and discussed issues related to the induction of a strategic investor and optionally convertible debentures held by the government. There are legal and procedural complexities .... The board has decided to meet again on June 12 (to consider the issue further)," said IFCI chief executive officer Atul Kumar Rai after the meeting.
IFCI had, earlier this year, called off the process of roping in a strategic investor. Thereafter, it appointed Ernst & Young, Centrum and Edelweiss, seeking advice on resuming the process and options for converting the debentures held by the centre into equity.
The consultants suggested various possibilities, ranging from conversion of debentures into preference shares to pure equity. The recommendations were discussed by the board today, but the meeting remained inconclusive.
The government does not hold any shares in the company, but had subscribed to the debentures as part of a bailout package for the NBFC at the beginning of the decade.
However, it does have a nominee on the board of the erstwhile development financial institution and exercises control through shareholding entities such as Life Insurance Corporation and IDBI Bank. LIC has already evinced interest in paring its stake in the NBFC from 11.39 per cent to 8.39 per cent.
IFCI had called for bids from strategic investors last year. But the stake sale process was called off due to apprehensions about the extent of management control to be offered. One of the issues raised by bidders was the lack of clarity on the debentures issued to the government. Sources said that IFCI has now given up its earlier inhibitions on management control.
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The shares of IFCI ended 6.5 per cent higher at Rs 62.30 on the Bombay Stock Exchange, compared to the previous closing of Rs 58.50.
It hit an intra-day high of Rs 65. The scrip has been a favourite with the markets ever since news of strategic sale broke out last year. It rose to a high of Rs 121.20 on December 17, 2007 before hitting a low of Rs 36.70 on March 24, 2008.