MUMBAI, NOV 17: The takeover battle for Gesco Corporation has taken a new turn with loss-making Mahindra Realty - the `white knight' helping the Sheths to salvage Gesco from the Dalmias - buying out the 6.34 per cent stake of International Finance Corporation (IFC) in Gesco at a price of Rs 44 per share. With this acquisition, the equity holding of Sheth-Mahindra combine in Gesco has almost touched 20 per cent. As the price of Rs 44 per share paid to IFC will be higher than its counter offer price of Rs 36 per share, their (Sheth-Mahindra combine) offer price for the public automatically stands revised to Rs 44. On the other hand, the stake of Dalmias in Gesco works out to 10.4 per cent.Abhishek Dalmia of Renaissance Estates, who launched a hostile bid for GESCO, had gone on record saying that his group would bid for the company so long as it made "economic sense", or else would not hesitate to walk out of it. The Dalmias first came out with an open offer for 45 per cent of GESCO at a price of Rs 27 per share. However, later the Sheth-Mahindra combine came out with a counter offer at Rs 36 per share. This counter offer would be financed by a line of credit from HDFC. Now both the camps are in talks with the financial institutions to pick up their stake in the company. Here again, there are differences of opinion among FIs. While IDBI is against hostile takeovers, others are willing to sell their stake at an attractive price. The Dalmias recently put HDFC chairman Deepak Parekh in a tight situation with a request for a similar line of credit that he extended to the Sheths and loss-making Mahindra Realty. The Dalmia move follows reports that Deepak Parekh has closed ranks with Mumbai-based industrialists and sanctioned an irrevocable line of credit to the Mahindras (reportedly for Rs 30 crore with a provision to increase in future) to finance their competitive bid. Parekh on Friday made it clear that his institution was not "acting in concert" with the Sheths-Dalmias combine in making a counter-offer for GESCO Corporation, and was only involved to the extent of funding Mahindra Realty, one of the parties to the counter-offer, without taking any equity exposure in GESCO. HDFC was "examining" the Dalmias' request for an identical line of credit for funding the GESCO hostile bid. When pressed further on when HDFC would take a final decision, he said: "It can take a week or even a month to examine it. We have to look into the strength of the borrower." Parekh also clarified that HDFC did not have a conversion clause in the loan to Mahindra Realty, as was being speculated in some circles. Parekh has been instrumental in getting the Sheths and the Mahindras together to fend off the Dalmias' hostile bid for GESCO with a counter-offer initially at Rs 36 per share. However, explaining HDFC's stand on funding the Dalmias, he said there could be a situation where the same institution funded two bidders for the same project before the parties put in the bids. "This has happened in telecom funding, where both parties bidding for licenses approach lenders for finance. Or even for Infrastructure Development Finance Corporation (IDFC), where, say, for a bid for Air India, parties can approach it for finance, before making the bid," he said. In the GESCO case, Parekh explained, the request from the hostile bidder had come after HDFC, as an institution, had already committed a line of credit to the Mahindras and they had already made an open offer for GESCO. "Here, the situation is slightly different. But there is nothing wrong in funding takeovers in general," he said.
