The Infrastructure Development Finance Company is meeting next month to discuss various possibilities of giving exit options to its stakeholders.
The board may consider an initial public offering too.
According to the original shareholder agreement, this was to be done five years ago. A two-year grace period was later given, which expires in 2005.
IDFC Chairman Deepak Parekh said: "No decision has yet been taken on what will be the exit option. It can be an IPO or some of the existing shareholders can buy out others' stake to give them an exit route. The board will discuss all possibilities."
IDFC's main shareholders are the government, the Reserve Bank of India and IDBI, which together hold 40 per cent.
Domestic financial institutions including HDFC, ICICI Bank, IFCI, State Bank of India and Unit Trust of India hold 20 per cent.
Foreign investors also have 40 per cent shareholding including AIG, ADB, IFC, CDC Deutsche Morgan Grenfell.
Meanwhile, talks of a between IDFC and IL&FS -- which will have created the largest infrastructure financing company in the country -- had hit roadblocks due to difference of opinion among the shareholders.
The merger is now subject to the approval of the respective boards and the shareholders.
Shareholders had been upset over the fact that instead of IDFC focusing on core infrastructure projects, it has been doing treasury management like a commercial bank.
Financial institutions and stakeholders in IDFC had also complained about their funds lying idle even after the capitalisation of the company, which was promoted to give a boost to the infrastructure in the country.
The merger is however, seen as being synergistic since IL&FS has experienced good growth in infrastructure financing and is short of cash. On the other hand, IDFC has ample funds.
The merger of the two will help bring down IL&FS's bloating non-performing assets in the region of 10-12 per cent, and give the merged entity the strength that it requires.
As on March 31, 2003, on a cumulative basis, IDFC approved financial assistance to 104 projects aggregating over Rs 12,46 crore (Rs 12.46 billion).
IDFC has also broadened its initial focus on power, roads, ports and telecommunications to a framework of energy, telecommunications and information technology, integrated transportation, urban infrastructure and food & agri-business infrastructure.
In its sectors of engagement, IDFC has been awarded lead arranger mandates and key advisory assignments.
