The interest in Industrial Finance Corp of India (IFCI) is hotting up. The buzz that the world's largest private equity firm, Blackstone, is likely to join the fray is getting louder, reports the ET. Among others who are likely to put in bids for a 26% stake in the country's oldest development financial institution are Standard Chartered Bank, Citigroup, Reliance Capital, Barclays and Swiss investment firm UBS Securities.
It is understood that domestic institutions such as Punjab National Bank, LIC and IDBI are also likely to submit expression of interest (EoI). The last date for submitting EoIs for the sale closes on September 14.
Both officials at Blackstone and IFCI had no comment. Blackstone India CEO Akhil Gupta said in an email, "We don't respond to market rumours." However, sources indicated that Blackstone could come in as a standalone strategic investor or as the lead partner in a consortium. "As the sole strategic investor, they can have a greater role in IFCI keeping the long term in view," a source said.
The Delhi-based financial institution invited EoIs from domestic and foreign investors to buy a 26% stake on August 14, 2007. It will follow a two-stage process for the selection of a strategic investor by end of January 2008. The names of the shortlisted candidates from among those responding to the EoI will be announced by September 25 this year.
Following this, the company would issues requests for proposal (RFP) on October 1. Only at the RFP stage will a distinction be made between various PE investors, an official at IFCI said. IFCI will not prefer asset strippers and pure short term investors looking to maximise investments.
There will also be a lock-in period of three years for the entity or the consortium which would be selected as the new shareholder. IFCI has said that the bidder should be in the business of financial services.
The IFCI scrip has been gained around 10% per month since January 2007 when it was around Rs 12. It closed at Rs 74.25 on Monday on the NSE. Analysts say that the scrip has shown resilience over the past few months, despite turmoil in the markets.
"The volume traded in the market is disproportionate to the market capitalisation of IFCI," a source said. This trend has largely held, barring a few months, he added. IFCI's value derives from its financial investments, such as in the NSE, standard assets worth Rs 6,500 crore and improved NPA recoveries.
According to qualification parameters for making bids, a potential suitor needs to have an asset book of Rs 10,000 crore or a net worth of more than Rs 4,000 crore or a fund with average assets of more than Rs 10,000 crore. In case of a consortium, investors need to have a lead investor and hold at least 26% stake. The total number of members in a consortium should not be not more than four.
The IFCI board recently decided to appoint investment bankers for due diligence advisers.
Foreign investors including Morgan Stanley (2.5%), Goldman Sachs (3.3%), Citigroup (2.5%) and Deutsche Securities (4.61%) already have equity interest in IFCI. As many as 11 financial institutions, domestic as well as overseas, together held 34.8% stake in the company as on March 31, which includes 8.4% stake owned by LIC and 5.01% by IDBI. The accumulated losses for IFCI were Rs 4,772 crore and have come down but still stand at Rs 800 crore as on March 31, 2007.
It is understood that domestic institutions such as Punjab National Bank, LIC and IDBI are also likely to submit expression of interest (EoI). The last date for submitting EoIs for the sale closes on September 14.
Both officials at Blackstone and IFCI had no comment. Blackstone India CEO Akhil Gupta said in an email, "We don't respond to market rumours." However, sources indicated that Blackstone could come in as a standalone strategic investor or as the lead partner in a consortium. "As the sole strategic investor, they can have a greater role in IFCI keeping the long term in view," a source said.
The Delhi-based financial institution invited EoIs from domestic and foreign investors to buy a 26% stake on August 14, 2007. It will follow a two-stage process for the selection of a strategic investor by end of January 2008. The names of the shortlisted candidates from among those responding to the EoI will be announced by September 25 this year.
Following this, the company would issues requests for proposal (RFP) on October 1. Only at the RFP stage will a distinction be made between various PE investors, an official at IFCI said. IFCI will not prefer asset strippers and pure short term investors looking to maximise investments.
There will also be a lock-in period of three years for the entity or the consortium which would be selected as the new shareholder. IFCI has said that the bidder should be in the business of financial services.
The IFCI scrip has been gained around 10% per month since January 2007 when it was around Rs 12. It closed at Rs 74.25 on Monday on the NSE. Analysts say that the scrip has shown resilience over the past few months, despite turmoil in the markets.
"The volume traded in the market is disproportionate to the market capitalisation of IFCI," a source said. This trend has largely held, barring a few months, he added. IFCI's value derives from its financial investments, such as in the NSE, standard assets worth Rs 6,500 crore and improved NPA recoveries.
According to qualification parameters for making bids, a potential suitor needs to have an asset book of Rs 10,000 crore or a net worth of more than Rs 4,000 crore or a fund with average assets of more than Rs 10,000 crore. In case of a consortium, investors need to have a lead investor and hold at least 26% stake. The total number of members in a consortium should not be not more than four.
The IFCI board recently decided to appoint investment bankers for due diligence advisers.
Foreign investors including Morgan Stanley (2.5%), Goldman Sachs (3.3%), Citigroup (2.5%) and Deutsche Securities (4.61%) already have equity interest in IFCI. As many as 11 financial institutions, domestic as well as overseas, together held 34.8% stake in the company as on March 31, which includes 8.4% stake owned by LIC and 5.01% by IDBI. The accumulated losses for IFCI were Rs 4,772 crore and have come down but still stand at Rs 800 crore as on March 31, 2007.
No comments:
Post a Comment