LIC Likely To Bid To Buy 26% In IFCI

Life Insurance Corporation of India (LIC) is looking at the option of bidding for IFCI. The Delhi-based term-lending institution has invited bids for a 26% stake in the company. The bids will close on September 14, 2007. According to sources, the country''s largest insurance company has been approached by a number of private equity firms and hedge funds to bid for the IFCI stake as a consortium. However, senior officials from LIC said that they would prefer to bid alone. IFCI has said that a consortium of four members can apply for 26% stake, but each consortium should nominate a lead member. Private equity funds and hedge funds are keen on LIC or IDBI as their lead member. Among Indian entities, Punjab National Bank (PNB) has shown interest in acquiring 26% in IFCI. Similarly, several foreign banks and private equity firms have approached IDBI to bid as a consortium for IFCI. Even as many foreign entities have shown interest in IFCI, sources said the Central government is very keen that the controlling stake continues with Indian financial firms.

The FI, too, has indicated the applicant itself should be in the business of financial services. These are some of the main reasons for private equity firms and hedge funds looking at bidding as consortium with Indian players like IDBI and LIC. IFCI has also stipulated that there would be a lock-in period of, at least, three years for the investor who acquires 26% stake in it. According to the criteria set by IFCI, the applicant''s asset book should not be less than Rs 10,000 crore or it should have a net worth of Rs 4,000 crore as of March 2007