IFCI shares plunge 14% after Sebi exempts govt from open offer

Shares in IFCI plunged 14 per cent in early trade after market regulator Sebi (Securities and Exchange Board of India) approved a proposed hike of the government's stake in the firm to 55.57 per cent without triggering an open offer for shares of public investors.

The Sebi's approval was announced after market hours on Tuesday. The Union Cabinet had approved a proposal for conversion of debentures worth Rs 923 crore into shares of IFCI last month, following which the government's stake in the financial institution would rise to 55.57 per cent.

As per Sebi's takeover norms, any stake purchase of 25 per cent or more requires the acquirer to make an open offer for a further 26 per cent stake from the public shareholders.

At 09.42 a.m., the stock traded 7 per cent lower at Rs 29.80 on the BSE.

IFCI has huge interest among retail shareholders with over 1 million people holding 43 per cent of its Rs 787 crore equity base. LIC is the major shareholder in IFCI.

With the government planning to become a majority shareholder, any plan for a stake dilution in IFCI has been ruled out. This has also dealt a huge blow to investors.


(With inputs from PTI)