New Delhi: The city-based IFCI decided on 2 December to convert all optionally convertible bonds given to public sector banks into equity and retain the holding of state-run insurance companies at the present level of over 13%.
The move would raise the stake of these banks in the financial institution to more than 25%, taking the total holding of government-controlled firms to over 38%. This could come in the way of a prospective strategic investor holding management control over IFCI, sources said.
At a board meeting here, IFCI also fixed 14 December as the last date for receiving financial bids from the suitors, the company said in a statement. Of the eight shortlisted suitors, four have carried out due diligence on IFCI.
These four are consortia of Shinsei Bank Ltd, PNB and JC Flowers & Co; W L Ross, GS Capital Partners VI Fund, Standard Chartered Bank and HDFC; Sterlite Industries and Morgan Stanley and Co; and Cargill Financial Services Corporation and Texas Pacific Group. IFCI also said it is in talks with multilateral institutions to sell its stake.
The statement said public sector banks have agreed to convert their entire zero coupon rate optionally convertible bonds into equity. Besides, Life Insurance Corporation, another state insurer GIC and associates agreed to convert that part of debentures into equity, which would retain their holding in IFCI in percentage terms at existing level.
The public sector banks, including the country’s largest lender State Bank of India, own 10.17% in IFCI. Conversion of the nearly Rs900 crore debentures into equity would allow them to hold an additional stake of about 15%. This will take their combined holding to over 25%.