Strategic sale indicates transfer of management control. The government currently holds 61.2% stake in IFCI, valued at about Rs 850 crore at the current market price of Rs 7.25 a share.
IFCI has been considered in initial deliberations as part of the exercise to identify and monetise government’s investments in the financial sector. “It is a low-hanging fruit and can be done more easily rather than pursuing some big-ticket transactions such as banks and insurance companies, which may take time because of other issues such as valuation,” the official said.
The Department of Investment and Public Asset Management (Dipam) had last month invited bids for the appointment of a consultant for minority and strategic stake sales in the state-owned banking and insurance companies. The consultant will also help management of government equity in banks, insurance companies and financial institutions, it had noted in its request for proposal.
“IFCI has been successfully managing to recover its bad loans,” the official said. “With the loan book it has, it is expected that serious industry players will be interested to take over with full management control.”
A senior executive with IFCI, however, said there may not be many takers for the firm, given its elevated level of bad loans. “With gross bad loans of around Rs 10,000 crore and a credit portfolio of just over Rs 17,000 crore, it may not be that easy to find a suitor,” the person told ET.