NEW DELHI/MUMBAI: The IFCI board has put been in place a more transparent procedure for inducting a strategic investor amid concerns over the manner in which the country's oldest financial institution had set about doing the job.
The bidding process has been rejigged to address the issues raised at the board meeting held on August 4 by some of the directors who felt that the sale procedure was opaque and non-transparent. These directors wanted to ensure that there was no repeat of a scenario similar to the Sasan power project, according to a source who is privy to the developments.
The project's consultants Ernst & Young had failed to identify problems in the bid document of Lanco-Globeleq till the project was awarded to the consortium. Ernst & Young is the consultant for IFCI as well.
"Responding to this, the board had decided to have a foolproof and a transparent sale procedure and consider only serious buyers who will enable IFCI emerge as a stronger institution," said senior level Delhi based officials. At the the last board meeting, the directors had appointed N Balasubramanian, former chairman of Sidbi, as chairman of IFCI, replacing PS Shenoy.
The new board, a source close to the developments said, is wary of private equity funds, hedge funds and vulture funds getting a toehold into the institution since the intention is to continue the focus on development financing. Not just that, some of the board members are of the view that the sale should not result in the entry of an entity which could later indulge in asset stripping.
The source quoted earlier said that the erstwhile management was guarded about the process of the stake sale, but efforts are on now to make it transparent. A lower threshold for selection was originally fixed to facilitate participation from domestic entities. IFCI authorities are reckoned to be in favour of domestic investors because of the belief that local entities would have a greater understanding of the way a development finance institution works in India.
The bidding process has been rejigged to address the issues raised at the board meeting held on August 4 by some of the directors who felt that the sale procedure was opaque and non-transparent. These directors wanted to ensure that there was no repeat of a scenario similar to the Sasan power project, according to a source who is privy to the developments.
The project's consultants Ernst & Young had failed to identify problems in the bid document of Lanco-Globeleq till the project was awarded to the consortium. Ernst & Young is the consultant for IFCI as well.
"Responding to this, the board had decided to have a foolproof and a transparent sale procedure and consider only serious buyers who will enable IFCI emerge as a stronger institution," said senior level Delhi based officials. At the the last board meeting, the directors had appointed N Balasubramanian, former chairman of Sidbi, as chairman of IFCI, replacing PS Shenoy.
The new board, a source close to the developments said, is wary of private equity funds, hedge funds and vulture funds getting a toehold into the institution since the intention is to continue the focus on development financing. Not just that, some of the board members are of the view that the sale should not result in the entry of an entity which could later indulge in asset stripping.
The source quoted earlier said that the erstwhile management was guarded about the process of the stake sale, but efforts are on now to make it transparent. A lower threshold for selection was originally fixed to facilitate participation from domestic entities. IFCI authorities are reckoned to be in favour of domestic investors because of the belief that local entities would have a greater understanding of the way a development finance institution works in India.
0 comments:
Post a Comment