IFCI chief resigns, stake sale continues

IFCI chief resigns, stake sale continues

The chairman of institutional lender IFCI Ltd has resigned from the board of the company as it seeks to sell a 26% stake, a company official said on Sunday.

The official, who declined to be identified, would not give more details, but media reports said N. Balasubramanian resigned citing conflict of interest as he was advising Standard Chartered Bank, which is part of a consortium bidding for the IFCI stake.

The consortium, led by WL Ross, includes Goldman Sachs and HDFC Ltd, besides Standard Chartered.

The IFCI stake would be worth about $318 million (Rs1,284 crore) at current market prices. The state-run development finance firm is mainly involved in project financing, but also provides other financial, leasing and merchant banking services.

The development would not affect the process of the IFCI stake sale as financial bids from interested parties were yet to be invited, a key company official said.

Balasubramanian resigned with immediate effect before expressions of interest (EoI) from 10 entities were opened on Saturday, the official said, speaking on condition of anonymity. The board would ratify his decision, besides taking up “other routine issues" at its meeting scheduled for 20 September. The shareholders’ meeting will be held the next day, the official added.

Efforts to revive IFCI moved ahead after Balasubramanian assumed charge in early August this year. EoIs were invited from 13 August. Besides the consortium led by WL Ross, nine other companies and consortia have evinced interest in picking up stake in IFCI.

Out of them, seven are stand-alone, including domestic financial institutions IDFC, Kotak Mahindra Bank, GE Capital, Cargill, French banking company Nataxis, US-based private equity fund managers Blackstone and Newbridge.

The other consortia include Punjab National Bank with Shinsei Bank of Japan, and US-based investor JC Flowers and Morgan Stanley with Sterlite Industries. As on 31 March 2007, Morgan Stanley and Goldman Sachs had 2.5% and 3.3% stake in IFCI.

The company will evaluate the EoIs and announce the shortlisted investors on 25 September. Thereafter, the shortlisted entities will be asked to undertake due diligence and submit bids indicating the price they would be willing to pay for the 26% stake. Based on the technical and financial bids, the board will finalize the names of strategic partners. Request for proposal (RFP) will be floated by mid-October. The pre-qualified investors will need to submit their sealed financial bids by the end ofNovember.

International accounting and consultancy firm Ernst & Young had been appointed by IFCI as consultant to find a strategic partner for reviving the financial institution.

IFCI shares have witnessed a considerable buying interest ever since talks on the strategic sale started. The IFCI scrip has gained around 10% per month since January, when it was around Rs12. However, it closed down at Rs77.30 on ­Friday.

PTI contributed to this story.