Mumbai: Rating company Credit Analysis and Research Ltd (Care), majority owned by local banks and financial institutions, will hit the capital markets with its initial public offer (IPO) next week.
The company has fixed the price band for the issue at Rs.700-750. At the upper end of the band, Care will mop up about Rs.539.97 crore—the third largest IPO this year after Bharti Infratel Ltd and Multi Commodity Exchange of India Ltd (MCX). MCX raised Rs.660 crore in March through a share sale. Bharti Infratel is expected to raise about Rs.4,500 crore through its IPO that opens on 11 December.
Care’s sale of 7.1 million shares will open for subscription on 7 December and close on 11 December.
Shares of two other raters, Crisil Ltd and Icra Ltd, zoomed on Monday ahead of the share sale announcement of its rival.
Icra stock rose 20% to its lifetime high of Rs.1,582.10 intra-day before closing the day with a 19.53% gain at Rs.1,576 on BSE even as the bourse’s benchmark Sensex lost 0.18% to close at 19,305.32 points.
Crisil stock gained 10.39% to close at Rs.1,060.75 on BSE after rising to an intra-day high of Rs.1,099.90.
Analysts said the rise in stock prices of raters is an indication that Care IPO will fetch a good response from the market. “Crisil and Icra stocks have performed well all along. Rating agency stocks have demand and market sentiments remain positive. The surge in stock prices shows the prevailing demand,” said Alex Mathews, head of research at Geojit BNP Paribas.
At the higher end of the price band, Care is valued at Rs.2,140 crore. Crisil has a market capitalization of Rs.7,546 crore and Icra Rs.1,576 crore.
Since there is no fresh issuance of shares, the money raised by Care will go to the selling shareholders.
Care’s major promoters include country’s largest lender State Bank of India, IDBI Bank Ltd, Canara Bank, Federal Bank Ltd and IL&FS Ltd. They are collectively selling 25.22% of their holding in the firm. Kotak Mahindra Capital Co. Ltd, DSP Merrill Lynch Ltd and Edelweiss Financial Services Ltd, among others, will manage the issue.
Care is the first domestic rating company to get listed. Global rating agency Standard and Poor’s holds a 53% stake in Crisil and Moody’s is the single largest shareholder in Icra with a 28.51% stake. Fitch Ratings Ltd is unlisted.
Care plans to expand into Nepal and Mauritius and has entered into agreements with credit rating firms in Brazil, Portugal, Malaysia and South Africa to form an international credit rating agency, said D.R. Dogra, managing director and chief executive of Care. “This would operate an independent rating agency to mobilize resources from international financial markets,” Dogra said.
In 2011-12, Care’s net profit rose to about Rs.115.70 crore from Rs.90.95 crore in the previous year. Crisil’s net profit in calendar 2011 rose to Rs.206.42 crore from Rs.205.47 crore while Icra’s profit in 2011-12 rose to Rs.54.01 crore from Rs.48.11 crore.