Govt-controlled banks' holding in IFCI to increase to 39%

NEW
DELHI: As portion of a restructuring exercise, the Industrial Finance Corporation
of Republic Of India (IFCI) on Saturday decided to convert all optionally exchangeable bonds
(OCB) given to public sector Banks into equity. At the same time, OCB owned by
the state-run insurance companies will be converted in such as a manner that they will
retain their retentions at the present degree of over
13%. The move would raise the
stake of these Banks in the fiscal establishment to more than than 25%, taking the
total retention of government-controlled steadfasts to around 39%. This could change
the share terms of the non-banking finance company (NBFC) as its paid-up capital
after transition will increase substantially. The determination was taken at a time
when the finance company is in the last leg to deprive up to 26% of interest to
strategic investors. Four out
of eight shortlisted bidders have got got completed owed diligence and have been asked to
submit fiscal commands by December 14, IFCI said in a statement. The four bidders
which have got completed owed diligence include Sterlite-Morgan Stanley,
Cargill-Texas Pacific Group, a grouping comprising PNB, JC Flower and Shinsei Bank,
and a pool consisting of WL Ross, grams Capital Partners, Standard chartered
and HDFC. The depository financial institution have total
convertible chemical bonds of Rs 1,479 crore. Of this, around Rs 500 crore is owned by
insurance companies like LIC, GIC and its four earstwhile subsidiaries. The
remaining around Rs 1,000 crore is owned by public sector banks. According to a source, the
debt will be converted into equity at Rs 80 as per share as per the SEBI
formula. That agency Banks will be given 12 crore fresh shares. This will
increase the paid up working capital of the finance company from Rs 630 crore to Rs 750
crore. Insurance companies will
convert a portion of their OCB in the equity in such as a manner that their holdings
in IFCI will stay 13% even after the divestment to the strategical partner. This
is possible if around 60% of the coverage companies' OCB retention is converted
into equity. Originally, IFCI
had offered to convert around 50% of the OCB into equity and agreed to pay
higher voucher charge per unit on the remaining bonds. The state owned physical things turned down
the offer.