After six months, IFCI looking to sell, again
30 May 2008
New Delhi: Within six months of its first attempt to find a suitor for selling its stake, the Industrial Finance Corporation of India (IFCI) is now again seeking proposals from prospects.
The IFCI board has decided once again to go in search of a strategic partner, a move that saw IFCI's scrip head due north by 10 per cent.
Speaking to the media post the board meeting, Atul Kumar Rai, CEO of IFCI said that the board meeting discussed issues pertaining to induction of a strategic investor, options relating to the convertible debentures held by the government and the legal and procedural complexities involved in the stake sale process. The government nominee also attended the meeting.
Rai said that the company would be revived soon, and that the board intends to pick up where it left off earlier, thereby indicating a possibility of a 26 per cent stake sale, with somewhat greater management control. The board's next meeting is scheduled for 12 June.
However, sources indicate that the government could exercise its right to convert the optional convertible debentures of Rs923 crore into equity, thereby giving greater clarity to the strategic investor. During the last stake sale exercise, this became a source of uncertainty for many bidders, with the stake sale process eventually falling through mainly because of issues pertaining to management control. Then, IFCI had rejected Sterlite Industries and Morgan Stanley consortium's offer to buy a 26 per cent stake in the company, as it was conditional.
IFCI's shares have plummeted 32 per cent this year, and are now starting to look up given the talk of a revived stake sale.
IFCI had appointed consultants Ernst & Young, Centrum and Edelweiss for advice on restarting the stake sale process and on options for converting the debentures held by the government into equity. The consultants recommended possibilities such as conversion of debentures into preference shares, or to pure equity, which formed part of the discussions at the board meeting. However, the board was yet to arrive at a decision.