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SBI, LIC likely to raise stakes in IL&FS via rights issue, says report

SBI, LIC likely to raise stakes in IL&FS via rights issue, says report
Public sector entities State Bank of India (SBI) and Life Insurance Corporation (LIC) are likely to increase their stakes in IL&FS by subscribing to its forthcoming rights issue, Times of India reported.
The state-owned finance companies will also provide liquidity support to stave off a crisis, the report said.
The shareholders of the infrastructure financier will meet in Mumbai on Saturday to approve increasing the company’s authorised capital to Rs 4,500 crore from Rs 1,500 crore to enable a rights issue, the report said, adding the company is also looking for additional credit facilities from its key shareholders.
IL&FS shares valuation has been marked down, sources told the paper, which can result in the existing stakes shrinking by 70 percent for those who do not subscribe. The IL&FS Employees Welfare Trust, which holds 12 percent, and Central Bank of India, which holds 7.6 percent, are unlikely to participate in the rights issue, the sources said. HDFC, which has a nine percent stake, is also not keen on participating, added the source.
Even though IL&FS on paper is a private company, most of its stakeholders are from the public sector and after the rights issue, it will predominantly be held by public entities.
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