GETS 55% Govt takes charge at IFCI

New Delhi: The government on Thursday decided to convert optionally convertible debentures of Rs 923 crore into equity and acquired over 55% stake in IFCI, the country's oldest financial institution. The move, which will expand the Delhi-headquartered company's equity base from Rs 738 crore to Rs 1,661 crore, will also end speculation over the government's plan to rope in a strategic investor, a decision it was forced to abandon a few years ago.      IFCI shares fell 0.25% to close at nearly Rs 35 on the BSE on Thursday. In a statement, the government said the transaction was exempted from the scope of the Takeover Code.      The decision of the Union Cabinet on Thursday brings an end to a government-led equity infusion over a decade ago when the finance ministry got prominent banks and financial institutions such as Life Insurance Corporation, State Bank of India and IDBI to infuse funds into IFCI, which was on the brink of defaulting on repayments in the wake of a distressed financial position. As part of this exercise, the government put in Rs 400 crore via the debenture route.      Again, in December 2002, the government approved financial assistance of Rs 5,220 crore for  2003 to early 2012, of which its share was Rs 2,900 crore. Within this, Rs 523 crore was given by subscribing to debentures while grants of Rs 2,400 crore were released till 2006-07, when IFCI turned profitable.      The government chose to convert the debentures into equity at par or at a face value of Rs 10.      Along with other public sector banks, the government will now hold over 68% stake in IFCI.