The committee, with the memberships of chairman, Housing Development Finance Corporation, Deepak Parekh; chairman, State Bank of India, AK Purwar and economist Omkar Goswami, at its April 20 meeting, had desired that a vision document be prepared to facilitate options to the shareholders, namely sale of shares through an initial public offer (IPO), sales of shares other than through an IPO pursuant to an independent valuation of shares, and on the continued holding/retention of shares by shareholders including foreign shareholders.
The committee had deliberated that in the present shareholders agreement, there were tag-along rights which would have required the government to purchase shares from private shareholders if IDFCs share were sold beyond the promoter category to non-promoters.
The government reposes faith in IDFC, since it has a rich intellectual capital and can perform the role of a nodal agency of a secretariat for catalysing Rs 50,000 crore in an Infrastruture Fund. This will provide IDFC an opportunity for expanding its presence in infrastructure development.
The committee also decided to empower the audit committee to finalise selection of audit firm and an investment bank for valuation of shares. The IDFC board will then take a considered view on the subject, allowing for an exit route for those private shareholders who may want to exit.
The committee has also agreed that it should revisit CEO compensation in line with market realities. The target date for appointing CEO is July 2004, and a recruitment firm may be apointed for this. The committee has also suggested extension for AKT Chari, who currently holds charge of managing director and CEO of IDFC, as it will provide continuity until a new CEO is in place. The committee will also review appointment of the chairman of IDFC Equity Fund at an early date.