Citigroup, Lehman, Barclays Show Interest In IFCI; Could Bid At Rs 70 A Share
Thu, 08/02/2007 - 21:01 — Sahad P V
It seems there is good interest in picking up stake in India's ailing industrial lender IFCI Ltd. Big boys like Citigroup, Lehman Brothers, BNP Paribas, Deutsche Bank and Barclays could be eyeing a 26 per cent stake in the Delhi-based financial institution, reports Reuters (Via Mint). The buyers may pay even Rs 70 a share (a few months ago IFCI shares were trading at Rs 15, currently it has shot upto Rs 55 levels), the report further adds, which could value the company at Rs 4,500 crore or $1.12 billion.
The board of the government-owned lender is meeting August 4 to start the process of inviting bids, says Reuters, and the sale may be concluded in six months. “We will go by the process and select competitively priced bids, even though there is tremendous interest from domestic and foreign parties,” an IFCI official has been quoted as saying. Ernst & Young is the adviser for IFCI.
Currently, IFCI has foreign investors like Morgan Stanley (2.5%), Goldman Sachs (3.3%), Citigroup (2.5%) and Deutsche Securities (4.61%). All told, 11 financial institutions, domestic as well as foreign, hold 34.8 per cent in the company (as on 31 March, 2007), which includes 8.4 per cent stake and 5.01 per cent stake held by LIC and IDBI,
We have earlier mentioned why IFCI is an attractive bet now. Although saddled with accumulated losses of Rs 4,000 crore (because of bad debt), the company has holdings in quality companies like National Stock Exchange (a 7 per cent of its 12.4 per cent stake in NSE was sold in January this year), ICRA Ltd, LIC Housing Finance, and Stock Holding Corporation of India. It also owns stakes in companies like credit rating agency CARE, Tourism Finance Corporation of India, asset reconstruction firm ACE, factoring firm Foremost Factors, and venture capital fund IFCI Venture Capital Funds, and IFCI Financial Services.
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