IDFC board green signal for Jan float

Existing shareholders to cede 30% stake on pro rata basis

The board of Infrastructure Development Finance Corporation (IDFC) today cleared the proposal for an initial public offering (IPO). The existing shareholders of IDFC will offload 30 per cent stake on a pro-rata basis.

The issue will hit the market in January 2005. The board appointed Kotak Mahindra Capital Company as lead manager for the issue. DSP Merrill Lynch and JM Morgan Stanley are also part of the syndicate which will manage the public issue.

Amarchand Mangaldas has been appointed the legal advisor to the issue. A committee of directors has been constituted to facilitate and monitor the process.

Analysts expect a small premium on IDFC shares which carry a face value of Rs 10. Its book value is around Rs 17.

The IPO would give the existing shareholders an exit option. Moreover, the listing of shares would offer them a fair valuation of their investment.

Under the present shareholders' agreement, the sponsor group comprising the government (20 per cent), RBI (15 per cent) and the Industrial Development Bank of India (5 per cent) are mandated to hold 40 per cent stake at any point of time. Another 40 per cent is held by foreign shareholders, while the rest is contributed by SBI, ICICI Bank, UTI, HDFC and IFCI .

IDFC announced a 44 per cent jump in net profit at Rs 259.15 crore in the financial year ended on March 31, 2004, compared with Rs 179.95 crore in the previous year. Total income increased by 39 per cent to Rs 637.08 crore from Rs 458.87 crore.

IDFC recorded its highest-ever approvals and disbursements in 2003-04. It approved 81 projects worth Rs 5,727 crore, compared with 24 projects worth Rs 2,304 crore. Disbursals stood at Rs 2,704 crore for 59 projects, compared with Rs 949 crore for 29 projects.