The forthcoming public issue by rating agency ICRA Ltd will see State Bank of India diluting its stake in the company by a nominal 0.21 per cent, but the meagre divestment has larger implications on both the entities.
Post-IPO, the rating agency can approach SBI for rating of its debt and private placement of bond issues, which it could not do till now, as any entity holding 10 per cent or above in a rating agency is treated as 'promoter' under the Securities and Exchange Board of India rules on rating agencies.
This had barred ICRA from getting any business from SBI over the last several years. Similarly, SBI, which till now had to approach Crisil and other agencies for getting its bonds and other instruments rated, would have more choice in the form of ICRA.
"We can now rate SBI's products which we were not allowed to rate before, as after our IPO, the State Bank will no longer be holding 10 per cent stake in the company," said a senior official of ICRA.
Though, ICRA had been rating the products of SBI's subsidiaries and associate banks, the fact that it was losing business from the SBI was hurting the rating agency.
Post-IPO, Moody's will be the only promoters of the company now and no other company will be considered as promoter in ICRA," said Vijay Wadhwa CFO & Company Secretary, ICRA Ltd.
Rating services form a major part of ICRA's business, which as on 31December is nearly 56 per cent of their total revenue.
Global rating agency Moody's Corporation holds 28.51 per cent stake in the rating agency. The IPO by ICRA is an offer for sale by existing shareholders of IFCI (21.13 per cent), Specified Undertaking of UTI (7.95 per cent), in addition to SBI (0.21 per cent).
ICRA is entering the capital markets with a public offering of 25,81,100 equity shares of Rs.10 each. The price band of the issue has been fixed between Rs.275 to Rs.330 per share.
