VCCircle

This seems to be an effort to sweeten the IFCI stake sale process. The board of the state-owned financial institution IFCI has reportedly decided to bring in IFC, the private equity arm of World Bank, as an investor. The Economic Times reports that IFC may pick up less than 20 per cent stake. This is independent of the strategic sale process currently underway at the Delhi-based IFCI.
The sudden move to bring in IFC is apparently because IFCI needs funds to meet its capital adequacy requirements. But that may also increase the interest of the bidders in IFCI. Only four of the eight shortlisted bidders have actually conducted due diligence till date. They include the Sterlite Industries and Morgan Stanley & Co consortium, the WL Ross, GS Capital Partners (VI) Fund, Standard Chartered Bank and HDFC combine, the Shinsei Bank, PNB and JC Flowers group and the Cargill Financial Services Corporation/Texas Pacific consortium (the latter is a new entrant). However, the remaining bidders, GE Corporation, IDFC, Natixis and Blackstone Group, are yet to conduct due diligence, which shows their interest may be waning.
One of the reasons for it is that the creditors in IFCI are converting debt into equity which results in fresh issuance of 15 per cent stake, and that will change the valuation of the company.
So it's in IFCI's interest to keep the interest levels high and make the deal attractive. The last date of submission for financial bids has been fixed as December 14. The IFCI board is expected to announce the strategic investor by December 20.