New Delhi: The board of Industrial Finance Corporation of India (IFCI) on 4 May passed an enabling resolution to increase the FII/FDI holding limit in the company up to 74% of its share capital.
“The decision would give clarity about the headroom up to which a strategic foreign investor would be able to pick up stake in the company,” told PTI.
However, he said the decision to hike the FII/FDI limit is subject to approval of shareholders, RBI, Sebi and all other Government and regulatory nods.
Under the existing provisions, an FII or FDI can take stake upto 24% in the company, he said.
IFCI had recently appointed Ernst & Young as advisor to look for a strategic investor.
A slew of foreign investors including Morgan Stanley (2.5%), Goldman Sachs (3.3%), Citigroup (2.5%) and Deutsche Securities (4.61%) already have significant equity interest in IFCI.
Altogether 11 financial institutions, domestic as well as overseas, hold 34.8% stake in the company as on March 31, which includes 8.4% stake and 5.01% stake held by LIC and IDBI respectively.
According to market sources, several foreign banks like Citigroup, Barclays, Morgan Stanley and ABN Amro Bank have shown interest in IFCI, the oldest financial institution of the country incorporated in 1947.
Reacting to the news, the scrip touched its 52-week high of Rs 50, up 7.2% over yesterday’s close of Rs 46.65 on the Bombay Stock Exchange.
Shares of IFCI later closed at Rs 48.55, more than 4% as 4 crore shares changed hands.
IFCI held 12.44% equity shares of National Stock Exchange and agreed to offload 31,50,000 equity shares (constituting 7% holding) to four institutional investors — Goldman Sachs, NYSE, General Atlantic and Soft Bank on January 10, when an agreement was signed in this regard.
The formalities and other necessary documentation for the same have been completed on 31 March in respect of said sale, the company informed the Bombay Stock Exchange.