Mumbai: Sterlite Industries and Morgan Stanley led the race to get hold of 26% equity stake in country’s oldest financial institution IFCI.

The company’s board considered three bids, in its meeting held on Monday (Dec 17, 2007), which were submitted against eight shortlisted.

Sterlite Industries, Shinsei Bank Ltd. and Cargill Financial have submitted bids for adopting 26% stake in IFCI. Whereas the consortium of WL Ross, GS Capital Partners VI Fund and Standard Chartered Bank and Housing Development Finance Corp has opted out.
The shares allotment to the winner is expected to be finished by the end of January 2008. After induction of the strategic investor, IFCI will arrange a business plan to perk up its fortunes.

It is projected that around Rs 1,300 crore of debt, in the form of zero coupon optionally convertible debentures given to the banks and financial institutions, will be changed into equity.

This would lift up the stake of public sector financial institutions to 39% and the government may continue to influence IFCI even after the induction of a strategic investor.

The government has also the option to convert debentures worth Rs 923 crore into equity in IFCI at a later date.