Six months on, IFCI stake sale's back on table
The contentious stake sale of Industrial Finance Corporation of India (IFCI) is back, barely 6 months after its failed attempt to find a suitable partner.
By TNN |
NEW DELHI: The contentious stake sale of Industrial Finance Corporation of India (IFCI) is back, barely 6 months after its failed attempt to find a suitable partner. The IFCI board���s decision on Thursday to look for a strategic partner pushed up its scrip price by 10%. The board met on Thursday to consider induction of a strategic investor and issues related to optionally-convertible debentures held by the government. Shares in the firm jumped 9.6% to Rs 64.10 on the BSE.
���The board meeting discussed issues relating to the induction of the strategic investor, options relating to the convertible debentures held by the government and the legal and procedural complexities involved in the stake sale process,��� IFCI CEO Atul Kumar Rai said, while interacting with reporters after the meeting. The meeting was attended by a few directors on the board, including the government nominee.
���The company will be revived very soon, we are starting off with the stake sale from where we left before,��� Mr Rai said, pointing to a 26% stake sale possibly with greater management control. He did not disclose the number of bidders in the fray. The next meeting of the board is scheduled on June 12. There are unconfirmed reports that the government is likely to change its optional convertible debentures into equity, giving greater clarity to the strategic investor.
The government owns convertible debentures of Rs 923 crore that can be converted into equity shares at later date. This was ���an uncertainty factor��� for many bidders last time round.
IFCI stake sale fell through late last year on issues primarily relating to management control. IFCI had spurned Sterlite Industries and Morgan Stanley consortium���s offer to buy 26% stake in IFCI, as it was conditional. Its share price had fallen by 32% this year, before reviving after Thursday's talks of stake sale.
During 2007, the IFCI scrip jumped from Rs 10 in January to touch more than Rs 120 by December. In the recent past, Mr Rai had spoken to a TV channel saying that IFCI ���will not repeat the mistakes of the past��� suggesting that greater management skills of the strategic investor will be leveraged.
Creditor banks converted their debt into equity at the SEBI-formulated price of Rs 107 in December 2007. While it is understood that some banks sold their shares almost immediately before the process failed, some of them have been left holding on to shares whose value has plummeted since.
���The board meeting discussed issues relating to the induction of the strategic investor, options relating to the convertible debentures held by the government and the legal and procedural complexities involved in the stake sale process,��� IFCI CEO Atul Kumar Rai said, while interacting with reporters after the meeting. The meeting was attended by a few directors on the board, including the government nominee.
���The company will be revived very soon, we are starting off with the stake sale from where we left before,��� Mr Rai said, pointing to a 26% stake sale possibly with greater management control. He did not disclose the number of bidders in the fray. The next meeting of the board is scheduled on June 12. There are unconfirmed reports that the government is likely to change its optional convertible debentures into equity, giving greater clarity to the strategic investor.
The government owns convertible debentures of Rs 923 crore that can be converted into equity shares at later date. This was ���an uncertainty factor��� for many bidders last time round.
IFCI stake sale fell through late last year on issues primarily relating to management control. IFCI had spurned Sterlite Industries and Morgan Stanley consortium���s offer to buy 26% stake in IFCI, as it was conditional. Its share price had fallen by 32% this year, before reviving after Thursday's talks of stake sale.
During 2007, the IFCI scrip jumped from Rs 10 in January to touch more than Rs 120 by December. In the recent past, Mr Rai had spoken to a TV channel saying that IFCI ���will not repeat the mistakes of the past��� suggesting that greater management skills of the strategic investor will be leveraged.
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Creditor banks converted their debt into equity at the SEBI-formulated price of Rs 107 in December 2007. While it is understood that some banks sold their shares almost immediately before the process failed, some of them have been left holding on to shares whose value has plummeted since.
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