Abu Dhabi Investment Authority is unlikely to participate in the rights issue of the debtladen Infrastructure Leasing Financial Services (ILFS), said three people aware of the development.
In its annual general meeting on September 29, ILFS is going to propose capital expansion through rights issue to raise Rs 4,500 crore and chalk out a roadmap for the company.ADIA is looking to bring down its stake by not subscribing to the rights issue of ILFS, said a source in the know of the development.
They have been clear about not investing further in the company, which is seeking support from investors to sail through tough times.ADIA owns 12.56 per cent stake in ILFS and is the third-largest shareholder of the company after Life Insurance Corporation and ORIX Corporation, Japan.ADIA, in an email response, said they arent making any comments on ILFS.The other two shareholders LIC and State Bank of India have assured shareholders of helping the company in troubled times.
Apart from equity of Rs 4,500 crore, the company is also looking for a credit line of Rs 3,500 crore from the two shareholders.
State-run companies, including Central Bank of India, SBI and LIC, own 40 per cent in ILFS.We do not want to increase our stake, but given the discount to the share price being offered to shareholders, we may maintain our stake by subscribing to the rights issue, said another shareholder on the condition of anonymity.An SBI Capital Markets report has given a valuation of Rs 350 a share, while the rights issue is done at Rs 150 a piece, which is a steep discount to the fair value.ILFS had a net worth of Rs 7,400 crore as on March 31, 2018.
In addition, the board has also approved re-capitalisation of Rs 5,000 crore in ILFS Financial Services, ILFS Transportation, ILFS Energy, ILFS Environment, and ILFS Education.ILFS wont be able to tap the money market for another six months after it defaulted on payment of commercial paper.
The rating companies have downgraded its rating to D due to the delay in raising capital from the promoter group and delay in asset monetisation for unlocking the capital deployed towards various projects.ILFS is said to be in talks with Europes leading road operator, Atlantia of Italy, to sell a portfolio of toll-road assets for about $1.2 billion to reduce its debt.