IFCI Update

N Balasubramanian, chairman of ailing industrial lender IFCI which is looking for a strategic partner for stake sale, has resigned citing his conflicting role as adviser to one of the bidders.

The development would not affect the process of 26% stake sale by IFCI as financial bids from interested parties were yet to be invited, a key company official told PTI.

Balasubramanian, who resigned with immediate effect before Expressions of Interest (EoI) from 10 entities were opened yesterday, is no longer IFCI Chairman, 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 September 20. The board meeting will be followed by shareholders' meeting the next day, the official added.

Balasubramanian was also adviser to Standard Chartered Bank, one of the entities in a consortium, that has submitted EoI. A consortium-led by WL Ross, including Standard Chartered Bank, Goldman Sachs and HDFC has submitted the EoI.

Efforts to revive IFCI moved ahead after Balasubramanian assumed charge of the office in early August this year. EoIs were invited from August 13.

Besides a consortium-led by WL Ross, nine other companies and consortia have evinced interest in picking up stake in IFCI.

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.

Updated at 1845 hrs: As many as 10 domestic and foreign financial institutions and consortia have evinced interest in picking up 26% stake in IFCI, the expressions of interest for which were opened today.

Out of 10 suitors, seven are standalone including domestic financial institution IDFC, Kotak Mahindra Bank, GE Capital, Cargill, French banking company Nataxis, US-based private equity fund manager Blackstone and Newbridge, an IFCI official said.

The interested parties also include three consortia including one between W L Ross, Standard Chartered Bank, Goldman Sachs and HDFC, and another between Punjab National Bank with Shinsei Bank of Japan and US-based investor JC Flowers, he added.

Besides, Morgan Stanley in consortium with Sterlite Industries has also evinced interest in the picking up stake in the financial institution.

As on March 31, 2007, Morgan Stanley and Goldman Sachs had 2.5% and 3.3% stake respectively in IFCI.

The company will evaluate the EoIs and announce the shortlisted investors on September 25.

Thereafter, the shortlisted entities would 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 would finalise the name of strategic partners. Request For Proposal (RFP) would be floated by October 1.

The pre-qualified investors will need to submit sealed financial bids by November end.

Ernst & Young (E&Y) had been appointed by IFCI as consultant to find a strategic partner for reviving the financial institution.