Centre buys IDFC stake from RBI

The Government of India (GoI) today acquired Reserve Bank of India's 15 per cent stake in Infrastructure Development Finance Company (IDFC) from the Indian central bank at Rs 150 crore. This takes the central government's holding in IDFC to 35 per cent.

The Centre has also taken over the RBI's subordinated debt to IDFC to the tune of Rs 350 crore. The par value of the 15 per cent equity is Rs 150 crore.

The equity transfer was made against payment of cash by the Centre. Industry sources said the transfer has been at par since IDFC is an unlisted company. IDFC has proposed to go for an initial public offering in the next financial year.

The subordinated debt has been transferred against a new 30-year security "" GoI floating rate bonds 2035 "" issued to RBI on a private placement basis. The bonds carry a coupon of 6.49 per cent for the first 5 years and will be re-set every 5 years. The yield on the bond is in alignment with the market-related coupon of 5-year gilts.

Foreign investors including American International Group, IFC Washington, Asian Development Bank (ADB), Government of Singapore, CDC, Deutsche Asia Pacific, and a few others hold 40 per cent stake in IDFC.

Domestic institutions including Industrial Development Bank of India (IDBI) hold 25 per cent stake and the government the rest.

Deepak Parekh, chairman, IDFC, had earlier stated that even with the Centre taking over RBI stake, the infrastructure institution would remain an autonomous, independent body, and would retain its private sector characteristic.

With the proposed IPO, government holding could stand reduced. The objective of the public issue was to give some shareholders an exit option and at the same time, with the listing, the institution would get a fair valuation of shareholder investment.

According to the original shareholder agreement, the IPO was to be done five years back, and subsequently a two-year grace period was given which expires in 2005.