New Delhi: IFCI, which has received financial bids from three consortia for a 26% stake, is understood to have fixed Rs107 for converting bonds of PSU banks and insurance companies into equity.
“It roughly works out to be around Rs107 for converting zero coupon optionally convertible debentures of Rs1,300 crore,” an IFCI official said.
So, at this price the company would issue fresh equity of 12.1 crore to the banks and insurance companies that own optionally convertible bonds maturing in April 2022.
Once a formidable institution, IFCI’s financial position has been vulnerable. To bail out the institution, public sector banks and insurance companies gave money to IFCI through zero coupon optionally convertible debentures worth Rs1,479 crore.
Meanwhile, IFCI has fixed 17 December as the relevant date for determining the price of shares to be issued to the banks and insurance companies.
The proposed equity shares would rank equal with existing equity shares of the firm.
The institution has decided to convert all Rs900 crore optionally convertible bonds issued to PSU banks into equity.
It has also decided to partly convert bonds worth Rs579-crore issued to public sector insurance companies so that they retain their shares at the existing level of 13% even after selling 26% stake to the new partner.
The move would raise the stake of these banks in IFCI to more than 25%, taking the total holding of government- controlled firms to over 38%.
The government was also issued bonds worth Rs923 crore by the institution, but it decided not to convert them into equity.
“It (government) would not exercise its option in respect of its convertible debentures of Rs400 crore and Rs523 crore at this point of time,” IFCI had said.
Meanwhile, three suitors have submitted financial and technical bids for picking 26% in IFCI.
The IFCI board would consider the bids in its meeting to be held on 17 December, which was earlier scheduled for 20 December. After the board’s approval, the decision has to get the sanction from regulatory bodies.
The process of inducting a strategic partner that started in August is expected to complete in January next year.
As many as 10 suitors had expressed preliminary interest in buying the stake. However, only eight were shortlisted by IFCI board with Kotak Mahindra Bank and Newbridge Capital exiting the race.