Shares of credit rating company Credit Analysis and Research Ltd (CARE) dived more than 9 per cent after the company announced that the proposed stake sale by a consortium led by IDBI Ltd has been aborted as the bids were not found "acceptable".

The stock, which had hit a 52-week high of Rs 874.90 on Friday on the BSE slumped to a low of Rs 766.65 on the exchange this morning before making a mild recovery.

In a communication to the stock exchanges, CARE has said that IDBI has informed it (CARE) that a meeting was convened on February 22 to open and consider the submitted bids. But no bid was found acceptable to the selling shareholders and all of them have been rejected.

It was on February 13 that CARE said that IDBI, along with four other shareholders of CARE which together held more than 45 per cent of equity in the company were in the process of identifying a buyer for a potential sale of 1,11,29,492 shares in it. Initially, the shortlisted buyers were asked to submit their bids by February 25 while the sellers reserved their right to modify or abort the sale process at any time. But the deadline was advanced to Feb 22 because of intervening holidays.

CARE's board of directors, on its part to meet any eventuality, proposed to increase the investment limit by foreign institutional investors including their sub-accounts in the shares or convertible debentures by subscription or acquisition up to 74 per cent of the paid up equity share capital or paid up value of each series of convertible debentures as may be applicable.

The stake sale proposal created high trading interest in the stock that reached a new yearly high of Rs 874.90 on the BSE on Friday ahead of the IDBI meet to decide on the bids. The stock had appreciated by about Rs 100 in a week- from a weekly low of Rs 779.35 to a high of Rs 874.90 that was also its 52-week high. The stock had closed a little lower at Rs 858.50 on the BSE on Friday.

But after the company reported about the aborting of the stake sale by the IDBI-led consortium of sellers there was heavy selling in the counter today and the stock sank to a low of Rs 766.65 before recovering marginally to Rs 781.15, a loss of Rs 77.35 or 9.01 per cent. While no reasons were given for the decision to abort the stake sale, it was possible the fact that the bid had reportedly attracted only one bid could have been a factor. Media reports said that only Baring Private Equity Partners Asia had made a bid to acquire the more than 45 per cent stake on the plate. It was not clear what was the price it had offered for the stake.

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(This article was published on February 24, 2014)
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