Citi, Lehman lead race for IFCI stake
Citigroup and Lehman Brothers are leading the race to acquire a 26 per cent strategic stake in public-sector lender IFCI, reports Indulal P M.business Updated: Apr 29, 2007 18:55 IST
Citigroup and Lehman Brothers are leading the race to acquire a 26 per cent strategic stake in public-sector lender Industrial Finance Corporation of India (IFCI).
Other than Citi and Lehman, two foreign financial institutions--Barclays and ABN Amro Bank--as well as a few domestic fund houses are in the race for the IFCI stake.
"Offers made by Citi and Lehman are more attractive than the other players. A decision over the stake sale is expected this month," said a banker directly involved in the transaction.
However, he said the IFCI stake sale would be announced only after the consultations with the Foreign Investment Promotion Board and the Reserve Bank of India, and a final decision by the Ministry of Finance.
"The structure of the deal is complicated. The sale to a foreign player is coming under close scrutiny of the banking regulator and the FIPB," he said.
Citigroup and Lehman executives did not comment on the issue.
An IFCI executive said it had appointed advisers and a decision would be taken in accordance with their opinion soon.
In March, IFCI asked Ernst & Young to search for a strategic partner. The state-owned financial intuition has accumulated losses of about Rs 4,300 crore on its various investments. However, in 2006-07, IFCI reported a Rs 2,300 crore profit in the nine months April-December. The decision to sell the stake is part of IFCI's restructuring plans and it expects $200-250 million from the sale. Set up in 1947, IFCI is the oldest financial institution in the country.
Financial institutions held 40.32 per cent in IFCI on December 2006, which includes LIC's 8.4 per cent. Among foreign players, ABN Amro Bank and Morgan Stanley hold 4.94 per cent and 3.07 per cent, respectively.