IDBI-led consortium in talks to sell over 38% in rating agency CARE for more than $140M

A consortium of five shareholders of domestic ratings agency Credit Analysis and Research Ltd (CARE), including the single largest stakeholder IDBI Bank, is looking to sell a little over 38.3 per cent stake in the company, as per a stock market disclosure.

The selling shareholders together own over 45 per cent in CARE and are selling 11.13 million shares worth around Rs 890 crore ($142 million) as per the last traded market price. It is not clear if some of the shareholders are selling their entire stake or all of them are part exiting.

IDBI owns 16.69 per cent stake followed by Canara Bank with 14.97 per cent, IL&FS with 9.3 per cent, SBI with 6.31 per cent stake and Bajaj Holdings with 5.89 per cent are the top five shareholders of CARE, as of December 31, 2013. While Canara Bank and SBI are expected to be part of the selling shareholders, the names of the others could not be independently verified.

Calls made to CARE chief DR Dogra for more clarity did not elicit a response.

The company disclosed on Thursday that the selling shareholders are identifying a buyer for the potential stake sale and added that the shortlisted bidders have been asked to submit their bids for the shares by February 25.

The proposed deal may also trigger a mandatory open offer if the entire stake up for sale is lapped up by one investor.

CARE scrip shot up 3.81 per cent to close at Rs 796.6 a share on the BSE in a weak Mumbai market on Thursday.

The firm also said its board has approved the proposal to raise the foreign institutional investors (FII) holding limit in the company to 74 per cent from 24 per cent at present. It has scheduled an EGM next month to raise the ceiling of FII shareholding which would pave the way for the impending deal.

Foreign investors held 15.3 per cent in CARE as of December 31, 2013 of which FIIs held 13.65 per cent.

CARE, which went public in 2012, also counts among its shareholders names like Aditya Birla PE and Ascent Capital.

(Edited by Joby Puthuparampil Johnson)

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