IFCI, the oldest financial institution in the country, is re-examining a move to sell a 26 per cent stake to a strategic partner. After turning profitable in the last quarter, the company is learnt to have decided first to build a robust business model and then go in for an equity sale.
According to highly placed sources, IFCI now feels it is better to have basket of investors purely for resource mobilisation. “The important thing is to have a robust business model rather than a strategic investor who will eventually impose a business model, the sources said.
“Once the new management is able to put in a new business model, it will attract a better valuation over the medium term,” they added.
According to a July 6 board resolution, IFCI was to come out with a public announcement on July 16 inviting interested parties for a stake sale of 26 per cent. The strategic investors were expected to make bids within a month of the announcement. Ernst & Young is the consultant for the process and has prepared the information memorandum. The IFCI board would meet again on August 4 to discuss the issue, sources said.
The IFCI share price is continuously slipping since July 6. It is currently trading at Rs 53.60, down from Rs 63 on July 6. Leading multinationals such as Nomura Securities and US-based funds have shown an interest in the IFCI stake. Sources said Barclays was expect to bid upward of Rs 80 per share, resulting in a valuation of over Rs 4,000 crore for IFCI.
