IFCI Ltd has been selling its stake in various firms, in an attempt to raise funds to cut its NPAs. Photo: Bloomberg
Mumbai: IFCI Ltd, the oldest development finance institution in the country, has invited bids from investment banks to help it divest a 4% stake in The Clearing Corp. of India Ltd (CCIL), according to documents on IFCI’s website. The move is part of the lender’s efforts to clean up its balance sheet, which recorded gross non-performing assets (NPAs) of 40.9% as of 31 March 2018.
IFCI owns a 4% stake in CCIL. Other shareholders in CCIL include State Bank of India, IDBI Bank Ltd, ICICI Bank Ltd, Life Insurance Corporation of India, Bank of Baroda and HDFC Bank Ltd.
CCIL was set up in 2001 to provide guaranteed clearing and settlement functions for transactions in the money, government securities, foreign exchange and derivative markets.
“IFCI intends to sell its entire equity shareholding in CCIL, 2,000,000 fully paid-up unencumbered equity shares through a competitive bidding process to be submitted by a SEBI-approved Category I merchant banker. The scope of the bidder will be to arrange investor(s) for purchase of equity shares of CCIL on gross price basis i.e. consideration amount payable by the investor,” IFCI said in a notification.
According to the notification, the lender is seeking a minimum price of ₹ 650 per share for its stake, thereby a total consideration of ₹ 130 crore from the divestment.
IFCI’s efforts to hire a banker to help it sell its CCIL stake follow the lender’s efforts to directly invite bids for the stake from investors. In January, IFCI had invited bids from eligible investors for the 4% stake in CCIL at a price of ₹ 601 per share, valuing its stake at ₹ 120.2 crore.
In its efforts to reduce its bad loans, the development finance institution has been busy selling its stakes in several entities to raise funds. In September, IFCI sold a 24% stake in Tourism Finance Corporation of India for over ₹ 290.63 crore.
IFCI has also been selling its stake in the National Stock Exchange (NSE). In January, it sold a 0.20% stake in NSE for ₹ 92.51 crore.