| A consortium of Anil Agarwal-led Sterlite Industries and global financial services major Morgan Stanley has emerged as the frontrunner in the race to acquire a strategic 26 per cent equity stake in the troubled financial institution IFCI Ltd.
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| The IFCI board met today to select the bidder for the 26 per cent stake. The meeting of the board was going on at the time of going to press.
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| The board considered the three financial bids that were submitted against eight shortlisted.
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| Besides Sterlite, two other consortiums — Shinsei Bank-PNB-JC Flowers and Cargill Financial Services Corporation-Texas Pacific Group — had put in bids on December 14.
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| The IFCI share prices today closed at Rs 108.4 against Rs 113.65, a decline of 4.62 per cent in line with the market fall.
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| The allotment of shares to the winner is likely to be completed by the end of January next year. After the strategic investor is inducted, the non-banking finance company will prepare a business plan to revive its fortunes.
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| IFCI, which has been reeling under a high level of bad loans, turned profitable only in 2006-07 after five or six years of being in the red.
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| Currently, the shareholding of IFCI is dispersed among a large number of investors. However, state-owned banks and insurance companies collectively hold about 24 per cent in the company.
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| Recently, the IFCI board agreed to convert debentures of Rs 1,300 crore held by public sector FIs, out of a total of Rs 1,479 crore into, equity shares.
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| The conversion is likely to increase the stake of public sector financial institutions to 39 per cent and the government may continue to influence IFCI even after the induction of a strategic investor.
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| The government has also the option to convert debentures worth Rs 923 crore into equity in IFCI at a later date. |
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