As bidders line up to buy 26 per cent equity in Industrial Finance Corporation of India (IFCI), they will have to keep an eye on the next move of Life Insurance Corporation of India (LIC), the domestic behemoth. IFCI owes nearly Rs 500 crore in debt to LIC, which has the option to convert it into equity and take its total stake from 8.4 per cent now to 49 per cent. IFCI’s proposed strategic sale has attracted expressions of interest from 10 entities, of which 8 have been shortlisted.
The successful bidder will also have to make an open offer for another 20 per cent to take its total holding to 46 per cent.
Companies interested in buying a stake in IFCI will be aware of LIC's option to convert its debt into equity at par (Rs.10/- that is, now the share price is Rs.96/-) value.
Talk about the advantage of being a (very) early investor…