IFCI shortlists GE Cap, 4 others for stake sale

IFCI has shortlisted GE Capital, IDFC, the WL Ross-Goldman Sachs-Standard Chartered Bank-HDFC consortium, Shinsei Bank of Japan-Punjab National Bank-JC Flowers consortium and Sterlite-Morgan Stanley consortium for selling a strategic stake in the financial institution.

A total of ten investors or consortium of investors have expressed interest in buying at least a 26 per cent stake in IFCI.

The name of three other investors shortlisted could not be confirmed, while two investors have withdrawn from the race. The exact reasons leading to their withdrawal of applications are not known.

This means two of the remaining five "" Kotak Mahindra Bank, New Bridge Asia, Cargill Financial Services Corporation, Natixis and the Blackstone Group -- cannot be ruled out at the moment.

Sources said IFCI was still in talks with the two investors, who have opted out. "Discussions are on with them to find out the reasons for withdrawing EoIs and sort out any issue thereof."

So the final list of shortlisted players are not yet out. "The list will be ready by Monday and the pre-bidding conference with investors will be held on Wednesday," the sources said. IFCI is not keen to leave out any investor in the initial round to ensure competitive pricing.

IFCI will issue a request for proposal to the qualified investors in mid-October and the due date for submission of financial and technical bids will be by the end of November 2007. Subscription and allotment of shares to the selected investor will be done by the end of January, 2008.

The successful bidder will first buy 26 per cent and then another 20 per cent from the minority shareholders through an open offer. IFCI has set a precondition that the strategic investor will have to hold onto the shares for at least three years.

With the strategic investor buzz, the share price of the company has jumped from Rs 12.50 in January this year to Rs 99.15 last Friday. The skyrocketing of the share price at this point was a matter of concern as it increased the market value significantly, analysts said.

After a partner is inducted, IFCI will design an appropriate business model to revive the business. The term lender has not been lending for the last three years. However, it has made a good recovery of bad loans and monetised some of the good investments, pushing its profits in the last financial year and in the first quarter of the current financial year.