Crisil picks up 8.9% stake in rival rating agency Care

Shares of Care Ratings (formerly Credit Analysis and Research) rallied more than 16 per cent in morning trade today after its main rival Crisil picked up close to 9 per cent stake in the company through block deals. Crisil shares gained 2.6 per cent and Canara Bank rose 4 per cent in morning trade.

Rating agency Crisil has purchased 26,22,430 equity shares of Care Ratings, representing 8.9 per cent of its equity share capital. Crisil has acquired the stake from Canara Bank, which wanted to exit the rating company to shore up its capital. The deal is valued at Rs400 crore, The Economic Times reported citing unnamed bank officials.

Crisil is owned by international rating company Standard & Poor's while Care was originally promoted by IDBI.

Crisil said the investment has been made pursuant to a bid process conducted by Canara Bank, subsequent to their request for quotation issued on 19 June.

Canara Bank told CNBC-TV18 that the stake sale is a part of monetisation of non-core assets.

Care is credit a rating agency registered with the Securities & Exchange Board of India (Sebi) and is listed on the BSE and NSE.

Crisil, which became one of the public shareholders with the stake buy in Care, said this investment has no special rights and is in compliance with applicable rules and regulations.

Crisil continuously evaluates investment options as a part of its corporate strategy and this stake purchase is an investment in the excellent long term prospects of the credit rating sector in the country, it added.

According to ET, this deal could be the first sign of consolidation in the Indian credit rating industry, which has about five players now registered with market regulator Sebi.