IDFC plans share sale to bring down foreign holding; to seek Rajiv Lall as exec vice-chairman

MUMBAI: Infrastructure finance company IDFC is considering issuance of fresh shares to trim foreign holding ahead of its planned foray into universal banking.

The lender will also seek shareholder and Reserve Bank of India approval to appoint executive chairman Rajiv Lall as executive vice-chairman of the banking company, as and when it is set up.

The IDFC board on Wednesday gave an "in-principle approval for the proposed domestic fund raising (follow-on public offer/ preferential offer), to bring down the foreign shareholding in IDFC below 50%," the institution told the Bombay Stock Exchange. The foreign shareholding in the institution is currently 52.61%.

"We would reduce foreign holding by doing a preferential issue for domestic investors, a small offering to domestic investors," Lall had told ETin an earlier interaction. "We have already enforced a cap on foreign ownership. We will now further dilute. There would be a dilution of about 3%. It is not good for shareholders now, but we have to do it."

IDFC has a market capitalisation of about Rs 20,590 crore. "The institution could issue shares to domestic investors. The size of the issue could be about Rs 617 crore," said a banker close to the development.

IDFC, which along with Bandhan Financial Services was given an in-principle approval for banking licence, has a balance sheet of about Rs 60,000 crore. As it prepares to enter the banking space, the infrastructure financier is also planning to reduce its exposure to term loans given to large power and roads projects.

The institution is expected to sell infrastructure loans worth Rs 5,000 crore to other banks or financial institutions and transfer some to the proposed infrastructure debt fund subsidiary.