In a move that could boost the credibility and effectiveness of CRISIL Ltd, global rating major Standard & Poor's (S&P) is planning to become a majority stakeholder in the Indian rating agency. S&P is intending to acquire 35.34 lakh equity shares of CRISIL through a conditional open offer at Rs680 per share.
The conditional offer, with a minimum cut off level of 26.44 lakh shares, together with an existing S&P stake of six lakh shares would result in the global rating agency owning a little over 51 per cent of CRISIL's shares.
However, if the offer is accepted in full, S&P, which is a division of The McGraw-Hill Companies, would hold a little over 65 per cent in CRISIL.
The move is also slated to make S&P a majority shareholder in the Indian rating agency, which according to industry sources, would result in a major makeover for CRISIL. This would also bring in international expertise and consultancy practices to the company.
CRISIL has confirmed having received a communiqué from McGraw Hill of its intention.
In a press release the Mumbai-based rating agency says, "CRISIL has today received a letter from The McGraw Hill Companies (of which Standard & Poor's is a division) informing us that in order to deepen the existing relationship between Standard and Poor's and CRISIL and to facilitate working with each other more closely, MHC, and its wholly owned subsidiary, S&P India LLC, intend to make a voluntary conditional open offer to all the shareholders of CRISIL in accordance with the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997, as amended."
The release further adds, "The proposed voluntary conditional offer would be to acquire upto 3,534,488 fully paid up equity shares of CRISIL representing 55.67 per cent of the company's voting equity capital as on December 31, 2004, subject to a minimum acceptance level of 2,643,983 shares (51 per cent of the company's paid up equity capital). The offer is proposed to be made at a price of Rs.680 (Rs. six hundred and eighty only) per share."
According to Kathleen Corbet, president, S&P, "A majority position will enable S&P to integrate CRISIL more fully into our operations for the benefit of the Indian and international marketplace."