Govt to sell 8.84% stake via IDFC issue

The Centre is among the 16 shareholders of Infrastructure Development Finance Corporation (IDFC) offering part of their stakes to the public as part of IDFC's initial public offer (IPO).

The government has offered for sale 8.84 per cent of its 34.91 per cent stake pre-IPO in IDFC. After the IPO, the government's stake will drop to 23.29 per cent.

The IPO of 403.60 crore equity shares, includes an offer for sale of 283.60 crore of shares.

The government and the Industrial Development Bank of India (IDBI) are the sponsor shareholders of IDFC. IDBI has also offered for sale 1.50 per cent of its 4.99 per cent stake. After the IPO its stake will drop to 3.12 per cent.

Other domestic institutions "" State Bank of India, ICICI Bank, Housing Development Finance Corporation, UTI-I and Industrial Finance Corporation of India (IFCI) "" are also offering parts of their stake for sale. Their combined holding in IDFC after the issue will decrease to 12.47 per cent from 19.96 per cent.

IDFC has fixed Rs 29 to Rs 34 a share as the price band through a book-building process. The IPO will be open from July 15 to July 22. IDFC's book value per share at end-March 2005 was Rs 18.89, up from Rs 16.99 a year ago.

The sponsor shareholders in an amended shareholders' agreement signed in May 2005 have committed to retain a minimum of 26 per cent stake in IDFC for three years. Their combined holding in IDFC will drop to 26.41 per cent after the IPO from 39.90 per cent.

Foreign shareholders in IDFC, including Asian Development Bank, International Finance Corporation and Standard Life Asset Company, are also selling part of their stakes in the IPO. Their total holding will drop to 24.94 per cent from 39.90 per cent.