International credit rating agency Moody’s has revised its conditional open offer price to raise its holding in ICRA from 28.5 per cent to up to 55 per cent to Rs 2,400 a share, up 20 per cent compared to its previous offer of Rs 2,000 a share made three months ago.
The offer is conditional upon Moody’s picking a minimum number of shares which would give it at least 50 per cent holding in India’s second largest rating agency. This would involve shareholders tendering shares worth at least Rs 516 crore ($87 million).
If the open offer is fully subscribed, Moody’s Singapore Pte shareholding in ICRA will rise to 55 per cent from 28.5 per cent at present, in what may cost it as much as Rs 636 crore ($108 million).
Shares of ICRA short up 17 per cent to end the day at Rs 2,340 each on the in a flat Mumbai market on Wednesday.
The open offer starts June 3 and closes on June 16.
Citigroup is managing the open offer.
Interestingly the offer price was revised upwards despite the stock trading around the level of its original offer. This is unlike United Spirits, where Diageo came with a second open offer to gain control of the company after its previous offer did not find takers as the stock price had shot up much beyond the offer price. Diageo has significantly pushed up the offer price in its second attempt to gain majority stake in the company.
ICRA started as Investment Information and Credit Rating Agency of India Limited (later renamed ICRA Limited) in 1991. Five years later it signed an agreement with Financial Proformas Inc (FPI), now called Moody’s Risk Management Services, to provide credit education, risk management software, credit research and consulting services to commercial banks, financial and investment institutions, financial services companies and mutual funds in India.
In 1998-99 Moody’s Investors Service (Moody’s) picked a stake in ICRA and in 2001 hiked its stake by 9 per cent to become the largest shareholder in ICRA. Three years later it hiked it further to around 29 per cent and held its stake since then.
Last year McGraw Hill Financial Inc, which controls S&P, had acquired additional 15.1 per cent stake in India’s top credit rating agency CRISIL Ltd for Rs 1,290 crore ($214 million) through a voluntary open offer. With this, McGraw Hill Financial has increased its stake in rating agency to 67.8 per cent.
ICRA’s consolidated net profit 14.4 per cent to Rs 22.03 crore in the quarter ended March 31, 2014 over the year-ago period. In the same period its net sales grew a little over 10 per cent to Rs 80.2 crore.