IFCI Scraps Stake Sale To Sterlite-Morgan

New Delhi: In a dramatic development, the board of directors of IFCI on Dec 19 unanimously decided to cancel the process of inducting a strategic investor to whom a 26 per cent stake in the country''s oldest financial institution was to be offered via fresh issue of equity shares. Sterlite Industries-Morgan Stanley combine was the front-runner for the stake as it offered the highest price among the three consortia that submitted the financial bids last week. The deal was, however, canceled on Dec 19, in the wake of conditional offer made in the financial bid by the Sterlite-Morgan Stanley consortium, which was not acceptable to the members of the board, sources in IFCI said. Sources said that the Sterlite-Morgan Stanley consortium was not looking for management control, but they were certainly looking for some more representation on the board.

The consortium noticed that it was coming into IFCI as a strategic partner and not as a financial investor. Therefore, the representatives wanted to know how they could control the destiny of IFCI via their stake. At the time of invitation of expression of interest (EoI) in August this year for the stake sale, Mr Atul Rai, Chief Executive of IFCI, had said that IFCI was eyeing for a strategic investor who would help it remain relevant and viable. The RBI has now categorised IFCI as a systemically important non-deposit taking NBFC. IFCI sources maintained that an intricate matrix of issues including management control led to the deal being canceled on Dec 19.