Governmet re-starts attempts to see IFCI stake

Goverment has revived its effort to sell 26% stake in IFCI, plans of which were shelved in December last year.The stake sale process is expected to begin next quarter.Differences, however, persist over whether the new partner should be given management control. This was what had caused the IFCI board to cancel the process last year after the lone bidder, the Sterlite Industries-Morgan Stanley-led consortium, demanded management control.

The bidding process last year was fraught with problems after the board set a minimum reserve price of Rs 107, which was considered too steep. As a result, most prospective bidders withdrew. Of the three bids, two were for less than Rs 107 per share and were disqualified.

Read more in The Business Standard article.

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Management issue may upset IFCI sale again

On May 29, the board of IFCI announced that it would be making a second attempt to sell 26% in the term-lending institution. However lack of clarity on management control may once again dampen interest among investors who are seeking to bid for the strategic stake in IFCI.

Less than six months ago, IFCI was forced to call off its plans to sell stake after talks with Sterlite and Morgan Stanley — the consortium selected among bidders — failed. The bone of contention then was that of management control.

Sources said investors were unhappy with the uncertainty over management control. After having acquired 26% stake, the successful buyer would have had to make an open offer for 20%, which would raise their stake to 46% — making them majority shareholder. But even at this position, they were not guaranteed full management control.

Yet another bone of contention was the bonds worth Rs 923 crore held by the government. There is uncertainty on whether or not they would be converted into shares. A conversion of government stake would widen the equity base and bring down the stake held by the strategic investor.

Read more in The Economic Times article.

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LIC wants to dilute stake in IFCI

State-owned Life Insurance Corporation of India (LIC) wants to dilute its holding in IFCI even as the Delhi-headquartered non-banking finance company is awaiting cues from the government on its future strategy.


Sources said LIC has approached the IFCI management to lower its holding from 11.39 per cent to 8.39 per cent, the level it was at prior to conversion of debt into equity earlier this year.On its part, IFCI is seeking a legal opinion on how to go about the process.The sources also said the IFCI management is yet to hear from the government on the strategy it should adopt for restructuring the operations, which have been in a pause mode for almost a decade.

The NBFC has communicated the failure of the process to rope in a strategic investor to the government and also reported the apprehensions that some of the bidders had regarding the convertible bonds issued to the Centre, which helped it tide over the financial crisis. IFCI was saddled with high cost debt and was finding it tough to pay bondholders prompting the government to step in.

Read more in The Business Standartd article.

IFCI board may discuss stake sale on Apr 29

After failing in its effort to rope in a strategic partner last year, IFCI Board may take up the stake sale process again at its board meeting scheduled for April 29.
It is not the part of the board's agenda but may come up for discussion during the meeting.

IFCI board had aborted the process for equity sale to a strategic partner, rejecting the demand for management control by the successful bidder in December last year.
NRI billionaire Anil Aggarwal-led Sterlite Industries, jointly with global investment banking giant Morgan Stanley, had emerged as the front-runner by quoting the highest price.

Speaking about the stake sale two months back, IFCI CEO and Managing Director Atul Rai had said it has no immediate proposal to go for another bidding, but in the medium term may require an "angel investor".

Finance Minister P Chidambaram had also backed IFCI's decision to reject the bid offer in December, but said the company could get more offers when a rebidding is initiated. He did not give a timeframe for the rebidding.

Read more in The Economic Times article.

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IFCI stake sale called off !

IFCI, India’s oldest financial institution saddled with bad loans, today called off its stake sale plan after marathon talks with the Sterlite-Morgan Stanley combine ended in disagreements over the price and management control.

A press release from IFCI said since the bid was made on the condition that the consortium would take over the management of the company, it was decided not to proceed with it.According to sources close to the development, the Sterlite-Morgan Stanley consortium was offered management control at Rs 145 a share, which it did not accept.

IFCI then quoted Rs 111 apiece with three of the eight board seats. The bidders, however, insisted on five board seats at this price. At this point, the deal was called off.

Read more in The Business Standard article.

VCs ready to finance carbon credit business

The Indian carbon sector is getting hot. Venture capital firms are making a beeline to set up exclusive carbon funds for clean development projects (CDM) which have the potential to generate carbon credits.

Kick-starting the process is IFCI Venture Capital Fund, which is planning to float Green India Venture Fund with a corpus of around euro 50 million, to begin with. The fund could be raised to euro 100 million once a partner is roped in.

Read more in The Times of India article.

IFCI raises bar for strategic investor

IFCI Ltd, the troubled term lender that has started the process of inducting a strategic partner, has agreed to its creditor banks’ demands to convert all their debenture holdings into equity shares.

This formula, which is expected to be ratified at a board meeting on December 1, could jeopardise the prospective partner's attempt to gain management control at the New Delhi-based institution.

The short-listed bidders for a stake in IFCI include Blackstone Group, General Electric Capital Corporation, billionaire Wilbur Ross along with Goldman Sachs Group, Standard Chartered and HDFC, Cargill Financial Services Corporation, Natixis and Newbridge Asia. Their bids will be considered after the conversion issue is resolved.

Read more in The Business Standard article.

Blackstone, GE Capital, HDFC expected to bid for stake in IFCI

Manager of the world’s biggest buyout fund Blackstone Group LP., General Electric Capital Corp. and a group led by billionaire Wilbur Ross are among investors who may bid for a 26% stake in India’s oldest state-owned project financier, the Industrial Finance Corporation of India Ltd (IFCI).

Ross’s group, including Goldman Sachs Group Inc., Standard Chartered Plc. and Housing Development Finance Corp. Ltd (HDFC), is vying with Cargill Financial Services Corp., Natixis SA and Newbridge Asia HT LP, IFCI said in a statement to the Bombay Stock Exchange (BSE).

The successful bidder would gain access to a market where lending grew 28% last year, and where the Reserve Bank of India (RBI) limits foreign banks’ ownership of local private rivals to 5%.IFCI, which was bailed out by the government in 2003 because of bad debts, in July announced plans to sell a stake to a local or overseas investor to bolster its capital.

Other potential bidders for a stake in IFCI include a group comprising Sterlite Industries (India) Ltd and Morgan Stanley, and a team consisting of Japan’s Shinsei Bank Ltd, India’s Punjab National Bank Ltd and J.C. Flowers & Co., IFCI said. Kotak Mahindra Bank Ltd and Infrastructure Development Finance Co. (IDFC) may also submit offers, the lender said.

Read more in The Livemint article.

PNB may bid for IFCI stake

"Punjab National Bank may bid for a 26 per cent holding in institutional lender IFCI Ltd.", said the bank's chairman and managing director."The bank's board will take a final call on the matter," K.C. Chakraborty said, adding the bank shared some common account holders with IFCI.

The state-run Punjab National Bank had sought to acquire a controlling stake in IFCI more than three years ago but the proposal fell through. A spokesman at the bank could not be immediately reached.

State-run IFCI is looking for a strategic investor and has appointed Ernst & Young as its advisors.Citigroup, Lehman Brothers, BNP Paribas, Deutsche Bank and Barclays were eyeing a 26 per cent in IFCI.

IFCI invites bids for 26% stake sale

IFCI today kicked off the process to sell 26% stake to a strategic investor.The Delhi-based financial institution today invited expressions of interest (EoI) from domestic and foreign investors for the stake. The deadline for the EoIs is September 14, 2007.

IFCI will follow a two-stage process for selection of the investor by end-January, 2008.

In the EoI stage, IFCI will announce the names of qualified investors on September 25.In the proposal stage, the financial institution will issue a request for proposal to the qualified investors in mid-October.

The due date for financial and technical bid submission will be end-November, 2007. Subscription and allotment of shares to the selected investor will be end-January next year.

Read more in The Business Standard article.

Barclay's bid rumours excite street over IFCI

The wait is almost over for all those investors eyeing a stake in the oldest financial institution in the country — IFCI. The board of IFCI is meeting on August 4 to kick-start the process of inviting bids for the strategic sale.

Meanwhile, speculation is rife that among the many interested parties, Barclays is willing to pay a premium of Rs 85 per share. Sources at IFCI maintain that bidders will be selected on a competitive basis.

The price tag for IFCI can be more than Rs 4,000 crore, industry sources said. Various portfolio investments, where value can be unlocked at a later stage, can yield Rs 2,000 crore, recoveries from NPAs could yield another Rs 2,000 crore, and real estate assets another Rs 3,000 crore.

Read more in The Economic Times 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.

ICRA zooms 141% on Day 1

Shares of ICRA, a credit rating agency part-owned by Moody's Investors Service, rose by 141% on its debut day on the markets, becoming the fourth biggest riser on the listing day.

ICRA, which was listed at Rs 525 per share on the Bombay Stock Exchange - 60% premium from the issue price of Rs 325, ended the day at Rs 797.60. The top three biggest gainers on the listing day were Tantia Construction (220% increase), Nissan Copper (230%) and Cambridge Technologies (163%).

Moody's shareholding at 28.51% is valued at Rs 204.19 crore at the current prices while State Bank of India's stake of 9.99% is worth Rs 80 crore.

New Delhi-based ICRA raised Rs 39.42 crore ($9.2 million) selling about 1.2 million shares at Rs 330 apiece.Investors of ICRA, including IFCI, the administrator of the Unit Trust of India and the State Bank of India, sold their stakes in the initial sale.

Domestic financial institution IFCI sold its entire 21% stake (1.86 million shares), while Unit Trust sold 7,00,000 shares (7.95% stake) and State Bank of India offloaded 20,500 shares, equivalent to 1.6%, out of its 11.6% holding in ICRA.

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.