IFCI to cut stake in NSE, exit from broking subsidiary

At present IFCI holds 8.4% stake in NSE

 

IFCI, the government-owned finance company, will reduce its stake in the National Stock Exchange (NSE) and divest its entire stake in the broking and financial product distribution arm, IFCI Financial Services Ltd (IFIN).

Malay Mukherjee, managing director, said: “The board had given a nod for partial divestment of stake in the bourse in April. We are starting the process.”

At present, IFCI has 8.4 per cent in NSE — five per cent direct holding and the balance through subsidiary Stock Holding Corporation of India Limited (SHCIL). It will offload 2.5 per cent stake. The divestment will be done with the assistance of consultants to ensure transparency and price discovery. It is looking for value for the investments, he said

On the intention to get out of IFIN, Mukherjee said there were two subsidiaries, IFIN and SHCIL, in the same line of business — broking and financial product distribution and services. “We will like to avoid duplication,” he said.

Chennai-based IFIN was promoted in 1995 and has a strong network in the southern region. SHCIL is well spread in the western region.

IFIN runs a broking business on BSE and the NSE, merchant banking and membership of a currency segment of the MCX Stock Exchange. It also operates as a corporate agent for life and non life insurance.

In March, IFCI had acquired an additional 18.98 per cent stake in SHCIL from IDBI Bank.  Following the acquisition, IFCI has 52.86 per cent in SHCIL. SHCIL began by offering custodial and post-trading services, adding depository services and other services to its portfolio over a period of time. Meanwhile, IFCI has decided to close down IFCI-Sycamore Infrastructure Fund, for being unable to raise resources. It would not hit the IFCI books, as not much expenditure was incurred, said an executive.

In August 2011, IFCI had inked a pact with Sycamore Ventures to raise $500 million in Indian infrastructure projects. The fund’s focus includes all forms of power generation, transmission and distribution, gas distribution, coal mines, roads, bridges, railways.

It is in the process of roping in consultants to float two venture capital funds – Small and Medium Size Funds and Green Energy Ventures.

Last month, IFCI had indicated plans for a strategic investor for its factoring subsidiary, IFCI Factors.

It was looking for a partner to give a lease of life to a unit facing rough times. The performance of the subsidiary was adversely impacted by the long spell of economic slowdown.
EXIT ROUTE

* IFCI Ltd to cut stake NSE. Currently, it holds 8.4% in NSE
* It will also divest its entire stake in broking subsidiary IFCI Financial Services
* Plans to float two venture funds, Small and Medium Size Funds and Green Energy Ventures
* Shuts IFCI-Sycamore Ltd, a defunct infrastructure fund unit