IDBI in talks to buy 25% stake in GE arm

Industrial Development Bank of India (IDBI) is learnt to be in talks with GE Commercial Finance (GE), the financial arm of GE, to pick up around 25% stake in the latter’s construction equipment finance business in India. Infrastructure Development Finance Company (IDFC) will also hold around 35% stake in it.

Sources close to the development confirmed the move and said GE is all set to hive off its construction equipment finance business into a separate Rs 650-800 crore joint venture company and is in talks with IDFC and IDBI for the same.“Talks were initiated in the beginning of this year but global market slowdown and the current turmoil in the financial services sector led to the delay in the agreement. It may take some time for the final deal to come through,” said a source.

Globally, GE Commercial Finance has assets of over $335 bn. It caters to industries including healthcare, manufacturing, construction, infrastructure and equipment, among others.The company’s real estate portfolio spans across all market segments — from industrial, commercial and office space to residential and recreational developments.

RBI may block Citi`s plan to buy 3% in NSE

The Reserve Bank of India (RBI) may block Citibank India’s proposal to pick up 3 per cent stake in the National Stock Exchange (NSE).Citigroup already holds 2 per cent in the exchange.

A source close to development said the bank proposed to buy shares from the State Bank of India group, which holds 12 per cent (9 per cent by the State Bank of India and 3 per cent by subsidiary, SBI Caps).The bank has submitted a proposal to the RBI.

The banking regulator is of the view that Citibank India is a member of the Citigroup, which already owns 2 per cent stake in the NSE. Therefore, granting permission to Citibank India may lead to conflict of interest among related entities holding stake in the same entity.

As per the demutualisation norms, an individual entity cannot hold more than 5 per cent stake in an exchange. SBI and SBI Capital Markets have already pared their stake by 3 per cent and 2 per cent, respectively ,thus bringing down the combined stake to 12 per cent from 17 per cent earlier.

NSE has institutional holding from SBI, Industrial Development Bank of India, Corporation Bank, Oriental Bank of Commerce, Union Bank, Bank of Baroda and Canara Bank.Thus, NSE has already offloaded 26 per cent stake in favour of foreign investors as permissible under the foreign direct investment norms for stock exchanges.

IDBI Capital to sell 26% stake

IDBI Capital, a wholly owned subsidiary of IDBI Ltd, is planning to sell 26 per cent stake to a strategic foreign partner to boost its institutional broking business.

Sources said the company, which is into stock broking, internet trading, merchant banking and private equity, has held informal talks with foreign players and is finalising a merchant banker for the deal.

IDBI Capital could command a valuation of more than 4-5 times its net worth of Rs 350 crore. They also do not rule out the possibility of a higher stake sale (up to 49 per cent) depending on the valuation.

Bear Stearns, the biggest debt player in the US and the Australia-based Macquarie, who are keen on entering the Indian market, are two contenders for the stake purchase, said sources.

IDBI Capital is also into retail broking through its internet portal, corporate advisory and debt arranging & underwriting. It has a turnover of more than Rs 10,000 crore a year in the broking business. Last month, IDBI Capital increased its private equity corpus to Rs 150 crore.

Read more in The Business Standard article.

IDFC raises Rs2,100 cr through QIP route

The Board of state-run lender IFCI will consider a proposal on 6 July to invite preliminary bids for selling at least 26% stake to a strategic investor.Along with annual results, the board would take up the issue of inviting expression of interests (EoI) from strategic investors.

The lender has appointed management consultant Ernst & Young to look for the strategic investor. E&Y has been asked to suggest names of strategic investors and will help IFCI in carrying out modalities related with stake sale.

According to the plan, strategic investors will have to make bids within a month of the memorandum of information being made public. Following this, IFCI will shortlist some investors. These investors will be allowed to do a detailed due diligence and submit a fresh bid indicating the price they are willing to pay for the 26% stake.
Based on the second round of bids, the IFCI board will decide on the new stakeholder.
As a precusor to stake sale, IFCI had in May passed an enabling resolution to increase foreign holding in the company up to 74% of its share capital.

Foreign investors Morgan Stanley (2.5%), Goldman Sachs (3.3%), Citigroup (2.5%) and Deutsche Securities (4.61%) already have equity interest in IFCI.Eleven financial institutions, domestic and overseas, hold 34.8% in the company as on 31 March, which includes 8.4% and 5.01% held by LIC and IDBI respectively.

IDBI to raise $1.5 bn via bonds

State-run lender IDBI Ltd is planning to raise $1.5 bn in a medium-term note issue, its chairman and managing director VP Shetty said on Thursday.

The first tranche would be issued overseas within three months and the lead arrangers to the issue are HSBC and Barclays , he told reporters.Deputy Managing Director OV Bundellu, on his part, said the whole process could take about a year.

Shetty said IDBI was aiming for a credit growth of 18-20 percent and a deposit growth of 25 percent in the year to March 2008, Shetty said. IDBI's loan growth was 18 percent and deposit growth was 67 percent in 2006/07.

Read more in The Economic Times article.

IDBI Ltd launches IDBI Gilts as PD subsidiary

IDBI Ltd on Thursday announced the launch of IDBI Gilts Ltd as its wholly-owned primary dealer (PD) subsidiary.

"We see IDBI spanning all segments of the financial services space, be it banking, insurance, PD, asset management or private equity. I'm sure the new company will reach the pre-eminent position in the government securities market," IDBI Chairman and Managing Director V P Shetty said after inaugurating the IDBI Gilts office here.

IDBI was a leading primary dealer in the past and with the launch of the subsidiary today, "we will return to the top position and it will be the most profitable venture," Shetty added.

The new company has been set-up with net owned funds of Rs 100 crore in order to enable it to undertake permitted core as well as non-core activities.

Read more in The Economic Times article.

Central Bank plans to raise $197 mn IPO

State-run commercial lender Central Bank of India has filed papers with the regulator for an initial public offering to sell 20 percent, which bankers said could raise about Rs 80 crore ($197 million).

The bank said in its offer document it planned to sell 80 million shares, or a fifth of its post-issue capital.

"We are aiming for about 8 billion rupees," said a banker associated with the issue, adding it may open for subscription in July. Another banker also gave a similar figure.

The bank's net profit jumped 93 percent to Rs 49.8 crore in the fiscal year ended March, boosted by lower provisioning for bad loans, it said in the offer document.

ICICI Securities, Citigroup, Enam Financial, IDBI Capital and Kotak Mahindra are arrangers to the issue.

Corporation Bank bids Rs 850/shr for Maruti stake

Enthused by the oversubscription to its offer to sell its remaining 10.27% equity in Maruti Udyog (MUL), the country’s largest car maker, the government hopes to raise around Rs 2,500 crore from the auction. The total number of bids received were for around 3,59,00,000 shares as against 2,96,79,709 shares on offer (1.21 times the subscription).

A Finance Ministry official said the auction process is likely to be completed tomorrow itself at a meeting of an empowered group of ministers (eGoM), which is overseeing the sale. The Maruti scrip was trading at Rs 802.85 towards close of trade on BSE, up from the previous close of Rs 800.

Financial bids for the shares, at a floor price of Rs 760, were deposited today by 36 of the 39 companies that expressed interest to participate in the auction. The highest bid of Rs 850 per share for a lot of 1,00,000 shares came in from public sector Corporation Bank. The lowest bid of Rs 765 came from the Union Bank of India.

As many 20 public sector banks, insurance firms and mutual funds put in bids, along with private sector entities like HDFC among others. State Bank of India and a couple of its associates, IDBI, GIC and Canara Bank also participated in the auction.

Read more in The Business Standard article.

IFCI to sell 26% stake to strategic investor

IFCI Ltd will divest at least 26% of its stake to a strategic investor through fresh issue of shares. The board of the financial institution has decided to appoint management consultant Ernst & Young to look for the strategic investor, IFCI told BSE.

The move is aimed at bailing out the ailing financial institution. In 2002 and 2003, government tried to merge the institution with Punjab National Bank. But, the move failed as the bank found the deal very costly as IFCIhad huge bad loans on its books. Government also tried to merge the institution with IDBI, which also failed.

Meanwhile, government so far has infused around Rs 4,600 crore in IFCI to revive it. The 2007-08 budget announced Rs 1,300 crore fresh infusion in the institution to meet its restructuring liabilities, including payment for outstanding loan of Rs 880 crore. To raise funds, the IFCI also sold its 7% stake in NSE and 8% stake in the ICRA through offer for sale.

Read more in The Times of India article.