Wednesday, August 4, 2021
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Central Bank hires SBI Capital to sell stake in IL&FS

State-run Central Bank of India has appointed SBI Capital Markets Ltd to identify a buyer for its stake in Infrastructure Leasing and Financial Services Ltd (IL&FS).

“We have appointed SBI Caps as the merchant banker to find a buyer for our stake in IL&FS,” a senior bank official said. He, however, refused to put a valuation for the bank’s 8.34 per cent stake in the unlisted firm.

The top shareholders in IL&FS are Life Insurance Corp. of India (LIC) (25.34 per cent), Orix Corp. (23.04 per cent), Abu Dhabi Investment Authority (11.09 per cent) and IL&FS Employees’ Welfare Trust (13.65 per cent). Other shareholders include Housing Development Finance Corp. (HDFC) (9.81 per cent), State Bank of India (SBI) (6.98 per cent) and UTI Asset Management Co. Ltd (0.80 per cent).

Last month, Central Bank chairman and managing director Rajeev Rishi had said they would approach the government for additional capital of Rs. 1,500 crore this year and if there was any shortfall, it could look for some other sources to raise funds.

“Even if we assume that the government is not able to meet our entire requirement, then also we have enough resources, such as divestment of stake in IL&FS, to raise funds,” Rishi had said.

By selling its stake in IL&FS, the bank is also exploring an option to raise funds which will be required over the next few years to meet Basel III norms. “We are not in a hurry to sell the IL&FS stake. The decision will be taken only if the price we are getting is acceptable to us,” the official said.

Earlier this month, Central Bank had sold 71 million shares to LIC and raised Rs. 582 crore. This stake sale has brought down the government’s holding in the bank to nearly 84 per cent from 88.63 per cent.

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