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Credit rating agency Crisil has purchased Canara Bank’s 8.90 per cent stake in CARE Ratings Ltd for ₹435.32 crore.
There is buzz on the street that with this buy Crisil may be gradually pushing for consolidation given that tough competition from rivals is driving the pricing lower in the credit rating space.
Crisil said the investment has been made pursuant to a bid process conducted by Canara Bank, subsequent to their request for quotation issued on June 19. The public sector bank divested over 26.22 lakh equity shares in CARE at ₹1,660 apiece on Thursday.
“This investment in the equity of CARE has no special rights and is in compliance with applicable rules and regulations,” Crisil said in a statement. It, however, did not disclose the price at which it purchased the stake.
CARE is a SEBI-registered credit rating agency and is listed on the BSE and NSE. Crisil said it continuously evaluates investment options as a part of its corporate strategy.
“This stake purchase is for long-term prospects of the credit rating sector in the country. The prospects for the sector are driven by the significant demand for capital investments and infrastructure financing in India over the long term, much of which should benefit the sector,” it added.
As at March-end 2017, the five biggest single shareholders in CARE were LIC (9.79 per cent); Canara Bank (8.90 per cent); Franklin Templeton Investment Funds (5.94 per cent); Franklin Templeton MF A/C Franklin India Taxshield (4.88 per cent); and Reliance Capital Trustee A/C Reliance Banking Fund (3.42 per cent).
On Thursday, CARE shares spurted 11.79 per cent to end at ₹1,596.85, on the BSE. Crisil Shares rose 1.54 per cent to close at ₹1,949.65. Canara Bank ended 2.03 per cent at ₹331.9.
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