Saturday 29 September 2007

IFCI soars after short-listing 8 bidders

Shares of IFCI shot up by more than 10% on Friday after a financial daily reported that the public sector term lender has shortlisted eight bidders for the proposed sale of a 26% stake.

The newspaper report says that the list of shortlisted bidders includes the consortiums led by Wilbur L Ross and Shinsei Bank. However, the names of those bidders who have been left out have not been disclosed.

At 12:56 p.m., IFCI was quoting at Rs98, up Rs5.20 or 5.6% over the previous close. The stock earlier touched an intra-day high of Rs102.45 and a low of Rs94.15. The stock has gained over 18% in the past one week and a whopping 58% in the past one month.

As many as 10 bidders had submitted bids for acquiring a 26% stake in IFCI. Other members of the consortium led by Wilbur Ross include Standard Chartered Bank, HDFC and Goldman Sachs. Punjab National Bank (PNB) and JC Flowers are part of the consortium led by Shinsei Bank.

Others who had submitted EoIs included Blackstone, IDFC, Kotak Mahindra Bank, GE Capital, Cargill, Newbridge Asia, Natixis and a consortium between Sterlite and Morgan Stanley.

IFCI sources have been quoted as saying that, at this stage, it would not make sense to reduce the number significantly and therefore impact the competitive pricing of the valuation.

The shortlisted bidders would be informed latest by October 1. A pre-bid conference is scheduled for October 3. Thereafter, the shortlisted suitors would be asked to undertake due diligence.

Requests for Proposal (RFP) would be issued a week later. By November, financial bids would be submitted. The Board would then finalise the name of the strategic investor.

There is a lock-in period of three years for the entity or the consortium that would be selected. In addition, the bidders should be in the business of financial services with a long-term interest in the institution.