IDFC Ltd’s – the holding company of IDFC First Bank – management came in for sharp critique from investors over long delays in divestment of stake in assets, including the bank and mutual funds. There was also no clarity on meeting timelines for the merger of some of the entities.
In a conference call with investors ahead of an annual general meeting (AGM), Chairman Vinod Rai said the company had a very complex corporate structure. The three main entities are a non-operating financial company, IDFC Projects, and IDFC Foundation. The non-operating entity has various financial services businesses, including a bank and finance company. IDFC Ltd holds 36.5 per cent stake in IDFC First Bank, according to BSE filings. IDFC stock closed 3.36 per cent lower at Rs 54.7 per share on the BSE.
It has taken three-four years to unspool the complicated structure. Now what remains is the bank, mutual fund, and the foundation which has two joint ventures with Delhi and Karnataka governments, said Rai.
Rai said the management has engaged the advisor on divestment, with the objective to maximise value for shareholders. The advisor would short-list the pros and cons at the AGM slated for September 22.
Domestic brokerage Edelweiss in a note to clients said there was a lot of investor dissatisfaction with the delays that have happened so far. The management steering clear of offering any timelines has further compounded their worries.
There were also questions on why the process couldn’t be concurrent to expedite the timelines, said Edelweiss.