PE players set to takeover Care Ratings
A change in the ownership of Care Ratings is imminent in the few days, with private equity players Carlyle and Barings making a bid to take over IDBI and other institutions’ 45 per cent stake on Saturday.
On Saturday the auction for IDBI and other financial institutions’ stake in Care Ratings was closed. As confirmed by the sources, the all-cash offer has been made at a rate of Rs 900-925 a share; as a result the valuation of the company comes to be around Rs 2,600 crore. On Friday, Care Ratings shares closed at Rs 858.50 apiece, valuing the company at Rs 2,489 crore.
An open offer for other shareholders will follow, as the acquisition will trigger the takeover code. Indian banks are booking profits on their investments as their balance sheets are strained due to heavy provisioning as said by a banking source. Banks have also been asked by the government to arrange for their own funds as it is not keen to spend more to capitalise banks. While Canara Bank owns 15.21 per cent, IDBI owns 34 per cent stake in the company, State Bank of India another 6.4 per cent and IL&FS 5.99 per cent. A source has also confirmed that many other marquee private equity (PE) players and funds had entered the race but dropped out later.
All the top four rating agencies have now been taken over by foreign entities, after the takeover of Care Ratings by global private equity players. Global ratings agency Moody’s on Friday said it would make an open offer to raise its stake in local rating firm ICRA from 28.5 per cent to 55 per cent. The offer is valued at Rs 530 crore at a price of Rs 2,000 per ICRA share. The deal values ICRA at about Rs 2,000 crore. S&P already owns Crisil while Fitch owns Ind Ra.
Investment in Care Ratings comes at a time when the industry is witnessing a slowdown. Barings India currently has investments in Mphasis BFL Software, Marico, Muthoot Finance and Mannapuram Finance, and has exited from consumer products maker Jyothi Ltd, through its three funds. Last year Barings Asia took over Hexaware Software. Likewise, Carlyle has significant investments in Edelweiss and recently made a successful exit from Tirumala Milk Products.
Care Ratings’ revenue was Rs 54 crore, with a net profit of Rs 28 crore, for the December quarter, marginally down from the September quarter when its revenue was Rs 65 crore and profit Rs 35 crore. A Care Ratings official said “The Company is doing very well and that’s why many global companies have evinced interest.”
Source: Business Standard
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