This is first takeover bid after the announcement of the draft takeover code. It is also the first takeover of any asset management company in the country.
IL&FS will shell out Rs 10 per share though the current market price is around Rs 5. In effect it is paying a premium. The open offer will also be at Rs 10 per share. The market price of the scrip was Rs 5 yesterday's and the average price over the last six months was Rs 6. The scrip at one point traded at Rs 50. At a price of Rs 10, IL&FS will pay Rs 2.5 crore for acquiring the stake. The paidup capital of CVF is Rs 24.11 crore.
Lazard CreditCapital Ltd (LCC) -- the promoters of CVF -- and IL&FS reached an agreement yesterday for the acquisition of the entire shareholding of LCC and CreditCaptial Investment Trust amounting to 9.8 per cent in CVF's paidup capital.
The sale was at the insistence of the international Lazard Group which has a 40 per cent stake in LCC. The Lazard group wanted to move out of the venture capital business which is essentailly long-term in nature. Says Udayan Bose, chairman, LCC, "We being a part of the Lazard group are focussed on merchant banking and merger and acquistions which have short gestation periods and hence on the strong insistence from Lazard we divested our interests in venture capital business."
IL&FS has appointed DSP Financial Consultants to effect a tender off for 20 per cent of the outstanding share capital in accordance with clause 40B of the listing agreement and related Sebi guidelines. Even though IL&FS has acquired only 9.8 per cent of the stake which is well below the trigger point of 10 per cent it has gone ahead with the open offer as it intends to acquire a further stake. If IL&FS acquires 20 per cent it will be the single largest shareholder and it does not anticipate a counter offer.
With the acquisition IL&FS will take management control of CVF. There will be no immediate change in the board of directors except that the managing director of CVF, P S Mathur will quit and be replaced by an IL&FS nominee. Other major shareholders like Bank of India, Asian Development Bank, Commonwealth Development Corporation and IFC will continue to have their nominees on the board. Bose will also continue on the board. The next board meeting of CVF is slated for the end of this month.
IL&FS has acquired CVF for the synergies with its own area of business. IL&FS is primarily in the long-term business. CVF is the manager of several venture capital funds, including the South Asain Regional Apex Fund which entails a close operating relationship with 10 states in India. "IL&FS has a strong working relationship with these states, and the objectives of the CVF initiaitve are co-generic with IL&FS objectives," says Vimal Bhandari, executive director, IL&FS.
CVF is the asset management company for four venture capital funds -- the Oil and Gas Fund, the Information technology Fund, the Auto Ancillary fund and SARA.
