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The board of directors of Credit Analysis and Research Ltd (CARE Ratings) have approved a hike in the foreign institutional investor investment limit in the company’s shares to 74 per cent from 24 per cent.
In sync with the move, five big shareholders, including IDBI Bank, are likely to sell their stakes in the credit rating agency. These shareholders together have over 45 per cent stake in the company.
Investments by FIIs, qualified foreign investors (corporate) and non-resident Indians in the company as on January 31, 2014, stood at 13.65 per cent, 1.54 per cent and 0.46 per cent, respectively. This aggregates to 15.65 per cent.
The rating agency, in its notice to members, said the proposed move to raise the FII investment limit is aimed at improving the marketability, increasing liquidity and facilitate price discovery of the shares.
“The board of directors has given its consent, subject to the approval of the members of the Company, for increasing the limit of investment by FIIs, including their sub-accounts, in the shares or convertible debentures of the Company 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,” said CARE in a notice to BSE.
CARE further said, IDBI and four other shareholders are in the process of identifying a buyer for a potential sale of 1.11 crore shares in the credit rating agency.
As on December-end, the top five shareholders in CARE were: IDBI Bank (16.69 per cent shareholding), Canara Bank (13.25 per cent), SBI (6.31 per cent), IL&FS Financial Services (5.90 per cent), and Bajaj Holdings and Investment (5.89 per cent).
The rating agency said it has been apprised that the shortlisted bidders have been asked to submit their bids by February 25.
CARE has issued a notice to its members calling for an extraordinary general meeting on March 11 to seek their approval for hike in FII limit.
“However, we also understand that the sellers have reserved the right to modify or abort the sale process at any stage and that the sale is subject to execution of a mutually agreed contract and to necessary approvals,” said the agency.
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