New Delhi: The country’s oldest financial institution, IFCI, will invite bids later this month for the sale of 26% stake to a strategic investor.
“We will float global advertisement for inviting bids for strategic sale of stake in the next 10-15 days,” IFCI chief executive officer R M Malla told PTI here.
The board has given approval to preliminary information memorandum prepared by Ernst & Young in consultation with IFCI, he said.
The memorandum lays down the criteria for selection of bids, he said.
E&Y would help IFCI in carrying out modalities related with stake sale.
On whether the partner would be domestic or foreign player, Malla said the path has been laid out for the induction of a strategic partner, which could be local or global investor.
It could be a single entity or a consortium depending on synergies, he added.
According to the plan, strategic investors would have to make bids within a month of the memorandum of information being made public. Following this, IFCI would shortlist some investors, who will be allowed to do a detailed due diligence and submit a fresh bid indicating the price they are willing to pay for the 26% stake.
Based on the second round of bids, the IFCI board would decide on the new stakeholder.
As a precursor to the stake sale, IFCI had in May passed an enabling resolution to increase foreign holding in the company to up to 74% of its share capital.
Foreign investors Morgan Stanley (2.5%), Goldman Sachs (3.3%), Citigroup (2.5%) and Deutsche Securities (4.61%) already have equity interest in IFCI.
Altogether 11 financial institutions, domestic as well as overseas, held 34.8% in the company as on 31 March, which includes 8.4% owned by LIC and 5.01% by IDBI.
Following the stake sale, IFCI’s equity base will expand and the shareholding of existing investors will come down.
Out of the red recently, IFCI posted a net profit of Rs246.86 crore for the first quarter ended 30 June as against a loss of Rs15.61 crore in the same period last year.
During the quarter, total income of the company recorded a jump of 88.4% to Rs485.57 crore as compared to Rs257.61 crore.
Operating expenses stood at Rs349.95 crore, against Rs252.01 crore, up 38.8%.
During the year, the company earned a profit of Rs873.71 crore, after posting losses for five years in succession.