Business Standard

IFCI seeks bids to sell 26% pie

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BS Reporter New Delhi
State-owned term-lending institution, IFCI Ltd, today kicked off the process to sell 26 per cent stake to a strategic investor.
 
The Delhi-based financial institution today invited Expression of Interest (EoI) from domestic and foreign investors to sell 26 per cent stake. The deadline for submitting EoI is September 14, 2007.
 
It will follow a two stage process for the selection of a strategic investor by January-end, 2008.
 
In the EoI stage, IFCI will announce the names of qualified investors on September 25. In the proposal stage, it will issue request for proposal to the qualified investors in mid-October and the due date for financial and technical bid submission will be November end, 2007. Subscription and allotment of shares to the selected investor will be done in January end next year.
 
The investors, who must have at least five years experience in financial services, have to fulfill the following eligibility criteria:
 
The applicant investor or group of investors must have average asset portfolio of Rs 8,000 crore in the last three years. They must have to fulfill any three of these also - must have asset book of at least Rs 10,000 crore in immediate last financial year or networth of Rs 4,000 crore.
 
Consortium investors are required to have a lead investor, who should hold at least 26 per cent stake in the consortium. The total number of members in a consortium should not be more than four.
 
Investors will also need to hold IFCI shares for at least three years from the transaction date.
 
IFCI, the oldest financial institution in the country, turned around in 2006-07 after seven turbulent years. It made a net profit of Rs 898 crore in 2006-07 compared with a loss of Rs 74 crore in 2005-06.
 
IFCI has fully provided against non-performing assets (NPAs) of Rs 6,690 crore as of March 31, 2007. The financial institution, which also has a license of Non Banking Finance Company, will focus on recovery of NPAs that will add to its profit. The company has net loan assets of Rs 7,068 crore as of March, 2007.
 
"At this stage, IFCI is planning to induct a strategic partner to fund its growth plans to enable it play a significant role in the process of industrialization and infrastructure project development," said the preliminary information memorandum of IFCI.
 
IFCI plans to focus on lending to corporates, project finance, investment banking, venture capital business and fee-based activities like project advisory and infrastructure advisory services.
 
At the moment, shareholding in IFCI is widely dispersed, with foreign institutional investors holding around 22 per cent. Its board had recently passed an enabling resolution to increase FII holding to 74 per cent in the company subject to regulatory approvals.
 
IFCI share prices today closed at Rs 66.05, an increase of 1.3 per cent from previous closing of Rs 65.20 on the BSE.

 

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First Published: Aug 14 2007 | 12:00 AM IST

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