IL&FS board fails to decide on raising funds from investors
IL&FS was seeking a loan of ₹3,000-4,000 crore from its shareholders LIC and SBI after a group company, IL&FS Financial Services Ltd, defaulted on a short-term borrowing last month from Small Industries Development Bank of India
Mumbai: Infrastructure Leasing and Financial Services Ltd (IL&FS), the unlisted parent to a cluster of companies in various infrastructure verticals, failed to raise immediate funds from shareholders at a snap board meeting on Friday.
The company was seeking a loan of ₹3,000-4,000 crore from its shareholders Life Insurance Corporation of India (LIC) and State Bank of India after a group company, IL&FS Financial Services Ltd, defaulted on a short-term borrowing last month from Small Industries Development Bank of India. However, despite a day-long meeting, the board failed to arrive at a decision. The board will reconvene on 15 September, said a person aware of the development.
As of March 2018, IL&FS had about nine major shareholders, the biggest of whom are LIC, Orix Corp. of Japan, Abu Dhabi Investment Authority and Housing Development Finance Corp. Ltd.
Last week, IL&FS announced that its board had approved a rights issue of ₹4,500 crore to shore up capital in group entities. The company intends to issue 300 million equity shares at ₹150 each by 30 October. K. Ramchand, CEO of IL&FS, said the firm would raise another ₹4,500 crore in long-term borrowing from existing shareholders within the next one month.
The company’s net worth at the end of last fiscal year was ₹7,400 crore and consolidated debt across group companies stood at about ₹1 trillion. It is also facing a spate of debt downgrades by credit rating agencies.