IFCI dumps Sterlite offer, calls for bids to sell holding in firms

Mumbai: State-run term lending institution IFCI Ltd, which rejected an offer by a consortium led by Sterlite Industries Ltd to acquire a 26 per cent stake in it, has called for bids - in newspaper advertisements - to value and buy its unquoted shares in companies.

IFCI's plan to bring in a strategic investor received a setback with the board rejecting the demand for the management control by Sterlite Industries-Morgan Stanley consortium. IFCI has since aborted the process for equity sale to a strategic partner.

"The financial proposal submitted by the Sterlite Industries-led consortium was conditional. The board of directors has unanimously decided that the conditional offer is not accepted and, therefore, the same is rejected." IFCI said in a letter to the stock exchanges.

Sterlite-Morgan Stanley had sought management control in IFCI and the decision to call off the sale of 26 per cent equity - a process started eight months ago - was taken after three days of discussion at the IFCI board.

Sterlite-Morgan is believed to have offered Rs107 per share. This is also the price at which banks and FIs are converting their loans into equity. If accepted, the consortium's stake would have gone up to 46 per cent after the mandatory 20 per cent open offer to other shareholder as per the Sebi guidelines.

Apart from the Sterlite-Morgan Stanley combine, two other consortia Shinsei Bank-Punjab National Bank and JC Flowers and Co-Cargill Financial-Texas Pacific Group had also submitted bids.

IFCI has invited merchant bankers and other interested parties to submit bids before January 10, 2008.

IFCI was set up to fund industrial projects and over time it has acquired stakes in companies in lieu of debt.

IFCI shares opened down 15 per cent after the board of the firm rejected the offer by Sterlite-Morgan Stanley consortium. IFCI shares were trading at Rs80.05, down 20 per cent at 9:57 a.m.