Govt will hike stake in IFCI to above 50% soon

The government is planning to hike its stake in Delhi-based financial institution IFCI to above 50 per cent. “As of now govt has equity of 55.5 per cent but if you add the preference shares, then the government stake in the capital (equity + preference shares) it comes down below 50 per cent. 

 The government is trying to acquire some more preference shares and make it more than 50 per cent,” IFCI CEO & MD Malay Mukherjee said.

“The stake hike is in advanced stages and should happen in a month. It will require approvals by the bank board and the EGM,” he added. Meanwhile, the company has decided to raise upto Rs 2,000 crore through public issue of secured, redeemable, non-convertible debentures. The first tranche of the issue will open on October 20 and close on November 21 with an option for early closure or extension by such period, as may be decided by the Board of Directors.

“75 per cent of the issue proceeds will be utilised for lending/repayment of loans while 25 per cent of the proceeds will be used for general corporate purposes,” Mukherjee said.

The NCDs with tenure of 7 years and 10 years have annual coupon payout option, and will have a coupon rate of 9.90 per cent per annum for all categories of Investors i.e QIB, Corporates, HNIs and RII. There is an additional incentive of 0.10 per cent p.a over coupon rate applicable only for HNIs and RII. 

Thus, the aggregate of coupon rate and additional incentive for HNIs and RII is 10 per cent p.a. 

The Company is also offering NCDs with cumulative option for all three tenures i.e. 5 years, 7 years and 10 years. The NCDs of face value of Rs. 1,000 with a tenure of 5 years will be redeemed on the Maturity Date at Rs. 1,596.33 (QIB and Corporates) and Rs. 1,603.62 (HNIs and RII). 

The NCDs of face value of Rs. 1,000 with tenure of 7 years will be redeemed on the Maturity Date at Rs. 1,937.55 (QIB and Corporates) and Rs. 1,949.73 (HNIs and RII). The NCDs of face value of Rs. 1,000 with tenure of 10 years will be redeemed on the Maturity Date at Rs. 2,572.25 (QIB and Corporates) and Rs. 2,595.78 (HNIs and RII).