New adviser in hunt for IFCI investors
The country’s oldest financial institution's board has decided to appoint another adviser in the middle of the process to seek investors, reports Arun kumar.business Updated: Sep 05, 2007 00:37 IST
In a move that could delay the process of privatising IFCI, the country’s oldest financial institution, its board has decided to appoint another adviser in the middle of the process to seek investors.
The decision was aimed at strengthening the process of divestment, a company official said.
It is learnt that IFCI’s management is also exploring the option of roping in a basket of investors so that management control remains independent.
The new advisers, besides strengthening the due diligence process, is also expected to suggest an alternate mode to raise resources.
Ernst & Young, which was the sole advisor until now, had prepared preliminary information memorandum (PIM) issued to potential suitors. More than half a dozen foreign financial powerhouses, including Goldman Sachs, Citigroup, Lehman Brothers and a few hedge funds have expressed their desire to grab indirect control over the institution, which has a huge asset base.
A senior official of a potential suitor, who did not wish to be named, said the institution has an asset base of more than Rs 7,000 crore at book value, which at current market prices would be much more.
Both Goldman Sachs and Citigroup have over 2 per cent stake in the company.
Investment banking sources said that some of the funds had increased their stake from the June-end level to close to 5 per cent.
The bidding price is expected to be above Rs 100 per share, resulting in a total valuation of around Rs 7,000 crore, sources said.
In case they manage to acquire 26 per cent though fresh issues and another 20 per cent through an open offer, they could effectively end up holding over 50 per cent per cent for full control over IFCI.