Itdc Selloff Draws Flock Of Investment Banks

Strong interest has been shown to the strategic divestment programme of India Tourism Development Corporation (ITDC), with 12 investment bankers placing their `expression of interest' before the government. Tenders had been called for earlier this week, sources said.

This is the best response received from the investment banking community to strategic sales following the developments in Modern Foods, Balco and Kudremukh Iron Ore Company in recent months.

The formal selection of the global advisors for the ITDC divestment will take place in the coming fortnight, sources said. The bankers that have shown interest include DSP Merrill Lynch, Jardine Fleming, HSBC Capital Markets, Warburg Dillon Read, Dresdner Kleinwort Benson, ABN Amro Asia Equities and Morgan Stanley.

 

The `beauty parade' to select the global advisors to the strategic divestment programme of ITDC is set to take place in early August, sources said. SBI, the advisor to ITDC, will shortlist 7-8 banks after reviewing the presentations. Following this a final decision will be taken on the team.

The government holding in ITDC is at 90 per cent while the balance is held by the Tata group, through Indian Hotels.

The government is likely to spread out the process of selection for global advisors. This, sources claim, may reduce the chances of those banks which have already bagged other similar mandates. The Modern Foods mandate has been bagged by ANZ Grindlays, while the Kudremukh sale is learnt to have been bagged by Dresdner Kleinwort Benson and SBI Caps.

``More interest has been shown following the developments in Modern Foods, Kudremukh Iron Ore Company and Balco. The signs are that the government means business and activity in this sector is hotting up,'' a source at a investment bank said.

"Once the advisors have been appointed, a decision will have to be taken on whether it will be a pure strategic sale or whether the disinvestment should increase through a larger public float. This decision would depend on factors like the valuation and interest shown by strategic buyers to pick up an equity stake," a source said.

The global advisor, will be involved in the following issues like:

* Due-diligence for the issue

* Decision on the financial disinvestment amount

* Valuation to determine price range

* Pre-marketing to determine strategic sale partners

* Completion of the sale transaction

According to sources, with the government loosening its stand on market pricing, the marketing of the sale to strategic buyers would be easier.