IDBI's stake sale in NSE
only a part of its treasure
2007-06-29 15:51:58 Source : Moneycontrol.com
Industrial
Development Bank of India, IDBI has major investments
in listed and unlisted companies in India. Yesterday IDBI sold 9 lakh
equity shares
constituting 2% of the issued and paid up capital of National Stock
Exchange of India
to MS Strategic (Mauritius)
Ltd. for an aggregate sum of USD 50 million.
Even
after selling 2% stake in the NSE for USD 50 million (around Rs 200 crore), the
bank
still has 11% stake (49.5 lakh shares) in NSE, which can be valued at around Rs
1100 crore, based on the above valuations.
Apart
from that the bank has investments in SIDBI, NSDL, IFCI, IDFC, ARCIL and its
subsidiaries, which are valued at nearly Rs 3772.8 crore.
According
KR Choksey report, “The bank has substantial amount of investments in listed
and unlisted equities
of companies like in NSDL, SIDBI, IFCI, IDFC, ARCIL, NSE to name a few. Market
value of few of these investments stands at Rs 3772.8 crore
adding Rs 52.2 to the EPS of the bank.” The value of the bank will increase
manifold once the bank starts booking profits from these investments.
Valuations of few of the important investments of
IDBI
Investments of IDBI
|
Investments IDBI
|
Stake (%)
|
Basis of valuation
|
Total Value
(Rs. cr)
|
Value per
share
|
SIDBI
|
19.2
|
One time FY07 book value
|
1013.8
|
14
|
NSE
|
13
|
Recent stake sale in NSE by IFCI
|
1400
|
19.4
|
ARCIL
|
20
|
PE multiple of 4x FY07 EPS
|
29.6
|
0.4
|
IDFC
*
|
3.1
|
Current market value
|
422.4
|
5.8
|
IFCI
*
|
11.7
|
Current market value
|
370.8
|
5.1
|
Subsidiaries
|
|
|
|
|
IDBI Home
|
100
|
One time FY07 book value
|
|
5
|
IDBI Capital
|
100
|
One time FY07 book value
|
|
2.2
|
IDBI Intech
|
100
|
One time FY07 book value
|
|
0.1
|
IDBI Gilts
|
100
|
One time FY07 book value
|
|
0.1
|
Total
|
|
|
3772.8
|
52.2
|
Note: * Market price of
IDFC and IFCI taken above for the calculation is Rs.121 and Rs.49.6
respectively as on June 21, 2007. (KR Choksey report)
Company Description
IDBI was set up as a
non-banking institution to provide project finance. High funding costs and rising
NPLs led to its operations becoming unviable. The government therefore
restructured it by a) converting it into a bank b) transferring most of its
NPLs to an SPV c) re-pricing its high cost liabilities and d) merging it with a
private bank. IDBI is now the fifth largest bank in India, and poised to capitalize on
strong growth opportunities in the Indian banking space.
IDBI's principal
activities are to provide commercial banking services which include
merchant banking, direct finance, infrastructure finance, rehabilitation assistance,
venture capital fund, advisory,
trusteeship, forex, treasury and other related financial services.