GOVT CONSIDERS OPTION OF SELLING IL&FS
NEW DELHI: India is examining options including an outright sale of Infrastructure Leasing & Financial Services Ltd (IL&FS), a person with knowledge of the matter said, as the government tries to stem defaults at the lender with $12.6 billion of debt.
A plan to be presented to a bankruptcy court Wednesday by the state-appointed board of the lender includes selling the entire stake to a financially strong investor and ensure business continuity, the person said, asking not to be identified as the matter is private.
Other options include splitting businesses according to verticals and disposing them off to several buyers or injecting liquidity at group level to avoid an outright sale.
The beleaguered financier hasn’t stopped missing payments even after the government sacked the lender’s board and pledged to stem defaults. Fixing the cash flow crisis at the company is vital to revive confidence in India’s credit markets at a time when Asia’s third-larg- est economy grapples with rising oil prices and a plunging currency.
The Serious Fraud Investigation Office this month started an investigation into IL&FS.
The plan finalized by the new board led by Asia’s richest banker, Uday Kotak will be put up before the National Company Law Tribunal on October 31. A person familiar with the matter, who did not want to be named ahead of a submission of the proposals to the National Company Law Tribunal on Wednesday, said it could take six to nine months to fully address the problems at IL&FS.
“We will be able to gauge buyers’ interest only when we hit the market,” the person cited above said.
The court had approved the government’s move to take over the lender and accepted the plea that the move was crucial to protect the financial markets.
Finance ministry spokesman D.S. Malik declined to comment.