IFCI to let banks convert bonds into shares

Industrial Finance Corporation of India (IFCI) will be offering options to 30 banks and financial institutions to convert less than 50 per cent of their Rs 1,479-crore zero coupon debentures into equity.

IFCI is also expected to float request for proposal (RFP) within a week for 26 per cent stake sale and complete the process in two-and-a-half months.

Adding further, IFCI Chief Executive Officer and Managing Director Atul Kumar Rai, said, "And the remaining part of te debt will be given interest rate that is available on 10-year government security papers. These zero-coupon optional debentures are convertible only in 2021-22".

Rai claimed that this move will not hamper the process of stake sale as suitors had already been told that they would get 26 per cent post-diluted equity.

IFCI had short-listed eight entities out of 10 which had applied for expression of interest (EoI) to buy 26 per cent stake, while two companies - New Bridge Capital of the United States and Kotak Mahindra Bank have opted out of race.

On the number of bidders for buying 26 per cent stake in IFCI, Rai said, "The number of bidders for buying the stake may fall below the existing eight". A consolidation among the existing bidders cannot be ruled out, he added.

If the numbers fall below a certain level, the level of competition would not be of the required intensity. It is of utmost importance that the level of competition remains high," Rai told reporters here.