Now, US hedge fund joins race for IFCI

MUMBAI: Institutions, who were unwilling to touch IFCI with a barge poll even a few years ago, now want to buy a stake in the company. Soon it will be clear whether such interests are genuine, or the hype around the scrip is only to help some operators who have built up positions to make a killing.

The latest buzz is that the US-based hedge fund DE Shaw has joined the race for acquiring a strategic stake in IFCI, India’s oldest state-owned financial institution.

DE Shaw, with assets worth over $30 billion, is believed to have put in bids in response to IFCI’s decision to sell a 26% stake in favour of strategic investors, said sources. When contacted by ET, DE Shaw country head Anil Chawla said: “I do not comment on my investments.”

Apart from DE Shaw, a host of other leading investors are also reportedly contending for the IFCI pie. Blackstone, Citigroup, Barclays and Standard Chartered Bank figure prominently among the possible foreign suitors. Besides some of IFCI’s investments which have grown in value, the stock is thriving on the story that there is a real estate play underlying several dud loans of IFCI.

IFCI invited expression of interest (EoI) from foreign and local investors last month. It is expected to shortlist candidates from the list of bidders by September 25 while the selection process will be completed by January 2008.

IFCI has been in the thick of the action for the past some months amid a flow of significant developments, relating to sale of the institution’s stake in the National Stock Exchange, turnaround performance and the plans to rope in a strategic investor. The stock hit a new high of Rs 78.65, before closing 4.4% up at Rs 77.75 on Tuesday. It has outperformed the broader market, gaining 11% in a week and over 19% in one month. There has been a good amount of fund-based buying in the counter.

Around 46% of IFCI’s equity is in the hands of institutional investors, including domestic and FIIs. Public holding is around 54%, including 19% held by corporate bodies and 34.5% by individuals.

DE Shaw is the world’s fourth-largest hedge fund, which is reportedly planning to invest $1 billion in India by June 2008. It’s investments so far include $400 million in DLF SEZ, Crest Animation and in Hindi newspaper Amar Ujala. Apart from these transactions, DE Shaw has also invested over $500 million in the FCCB market.