Merge Icra, Care:Moodys

International rating agency Moody's Investors Services is keen on a merger between domestic agencies Investment Information and Credit Rating Agency and Credit Analysis and Research Ltd. Moody's holds 12 per cent in Icra.

This was indicated by Moody's in a recent letter to Industrial Development Bank of India. "Moody's has asked the FI if there has been any progress about talks of merger between the two rating agencies," sources said.

Senior IDBI officials said Moody's interest stemmed from the fact that the proposed merger would result in the formation of India's largest rating agency, and Moody's would have a stake in it.

 

IFCI Ltd has 23 per cent in Icra. IDBI and Canara Bank each hold 26 per cent stake in CARE, which has a strategic alliance with international agency Fitch IBCA.

Crisil, which has an equity tieup with the world's largest rating agency _Standard and Poors_ is the largest rating agency in the country at present.

Sources said Moody's had broached the idea of the merger a couple of months ago and the letter was a follow-up. "The talks about merger between the two entities was in the air during the time Moody's officials were in the city and the issue was discussed between the promoting FIs and Moody's," said sources.

"Fitch IBCA does not have any stake in CARE. Moreover, internationally it is been taken over by DCR. So, it would not affect the merged entity," added sources.

Besides, the Securities and Exchange Board of India has also asked the promoters of rating agencies to reduce their stake below 10 per cent in the rating subsidiary. Failing which, Sebi said, the promoters will have take ratings from two other rating agencies.

"If the merger takes place, both the FIs will earn better returns during divestments," said sources. "As a result, IDBI has kept the disinvestment in CARE on hold. However, both the FIs have yet to make the final decision on the issue," added sources.

IDBI had appointed SBI Capital Markets to valuation of share price of CARE in order to disinvest in the same. Subsequently, SBI Caps had suggested a price in the range of Rs 50 to 65 per share. "However, the merged entity could fetch anything in the region of Rs 200 and above," said sources.