The short listed bidders for IFCI stake will be announced today. Blackstone Group, manager of the world’s biggest buyout fund, General Electric Capital Corp and a group led by billionaire Wilbur Ross were among the 10 that have expressed initial interest in buying the stake. The winning bidder would gain access to a market where lending grew 28% last year and where the central bank limits foreign banks’ ownership of local private rivals to 5%.

IFCI, bailed out by the government in 2003 because of bad debts, in July announced plans to sell a stake to a local or overseas investor to bolster its capital. Ross’s group, including Goldman Sachs Group, Standard Chartered and Housing Development Finance Corp, is vying with Cargill Financial Services Corp, Natixis and Newbridge Asia, IFCI said in a statement to the Bombay Stock Exchange.

“What’s different about our consortium is we view this as being of strategic importance,’’ Ross said in an interview on September 17. “This is not just a trade, we really intend to be in India for the long term.’’
Other potential bidders include a group comprising Sterlite Industries (India) and Morgan Stanley, and a team consisting of Japan’s Shinsei Bank, Punjab National Bank and JC Flowers & Co, IFCI said. Kotak Mahindra Bank and Infrastructure Development Finance Co may also submit offers, it said.

IFCI posted net income of Rs 247 crore for the quarter ended June 2007, compared with a loss of Rs 15.61 crore a year earlier, according to its website. The company’s ratio of bad loans written off or provided for out of total lending fell to zero as of March 31 from a high of about 32% in 2004. IFCI was founded in 1948 to fund industrial and infrastructure projects when investment banks were non-existent in India and commercial banks lacked the funds to provide longer- term financing.

It was among the lenders that got caught up by rising bad loans in the 1990s, when interest rates climbed to about 15% and industries including textiles, chemicals and steel suffered excess supply. IFCI has shored up its finances by trimming bad loans and selling shares in companies such as the National Stock Exchange of India and rating company ICRA, which yielded a profit of Rs 793 crore in the year to March 2007, according to the company’s annual report.