The process of roping in a strategic partner for IFCI Ltd could be mired in controversy as N Balasubramanian, chairman of the board of the development finance institution, is also an adviser to Standard Chartered Bank, which is one of the bidders.
While it is yet to be confirmed whether Standard Chartered Bank has submitted a bid, experts see the association of Balasubramanian with one of the bidders as a conflict of interests. "As the chairman of the IFCI board, Balasubramanian has access to confidential information. If Standard Chartered Bank bids directly or through another agency, it leads to a conflict of interest," said an investment banker on condition of anonymity. The last day for submission of bids was Friday.
"Since I am not aware whether Standard Chartered Bank is bidding, it would be premature to comment. Let the bids open tomorrow, in case Standard Chartered Bank has submitted its bid, we will examine the issue and take appropriate action," Atul Rai, CEO and MD of IFCI, said.
Sources said more than 10 bidders, including IDBI Bank-LIC, PNB, Asset Reconstruction Company (India) Ltd and IDFC Ltd, had submitted their papers. Blackstone Capital Partners, Goldman Sachs, Barclays, Deutsche Bank, Standard Chartered Bank, JC Flowers, WL Ross and Cargill are the leading foreign bidders.
The IDBI Bank-LIC consortium, which owns 13.41 per cent in IFCI, appears to be the front-runner. Sources said bids were expected to be upward of Rs 110 a share. The successful bidder, after acquiring 26 per cent will also have to make an open offer for another 20 per cent under takeover guidelines.