Government may go for strategic sale in IFCI

NEW DELHI: After acquiring a majority control in IFCI, the government may opt for a strategic sale as part of its plan to dilute its stakeholding in what was the country’s oldest financial institution.

Sources said the view in government is that the Centre has managed to realize a good value on its investment of Rs 900 crore, which was given to IFCI by way of convertible shares at the start of the millennium.

But given that it does not have a business plan for it, the best route would be to sell it to another player, especially when development financial institutions that specialized in offering term loans are no longer seen to be relevant.

In fact, when IFCI shareholders tried to rope in a strategic investor five years ago, the uncertainty over how the government would deal with the convertible shares had resulted in muted response.

In fact, with Sterlite being the only remaining player in the fray, the sale process was abandoned.

Since then, IFCI has been looking for a viable business model but has met with little success. The change of rules has resulted in IFCI being branded as a non-bank financial institution. There is, however, no clarity on when the process will begin.

UNLOCKING VALUE

Centre is keen to monetize its assets to the maximum extent in a bid to bridge the widening fiscal gap. At present, govt has a 49% stake in Balco (it sold 51% to Sterlite), while it holds a little less than 30% in Hindustan Zinc.

A view in the corridors of power is that a market sale will raise more money than selling to metals tycoon Anil Agarwal Such a move is also expected to avoid any controversy, especially with regards to pricing.