A string of private equity firms are reportedly lining up for a controlling stake in Mumbai-based credit ratings firm Credit Analysis and Research Ltd. (CARE). Sources told the Economic Times that investment firms General Atlantic Partners LLC, Actis Capital LLP, Baring Private Equity Partners Asia and Apax Partners LLP are in talks with CARE's principal shareholders.
According to the report, the four private equity firms were picked from a pool of potential buyers last Thursday, after tendering non-binding bids to state-run lenders IDBI Bank Ltd., Canara Bank and the State Bank of India. The said banks are CARE's three-largest shareholders, who are looking to significantly reduce or exit their stake in one of India's leading credit ratings firm.
IDBI, Canara and SBI earlier this year approached several potential investors about a possible sale of a minimum of 32% to a maximum of 38% stake in CARE. The three Indian lenders collectively own a 38% stake in the credit ratings firm. IDBI is CARE's single largest shareholder, boasting of a 16.6% stake as of December 2013, Economic Times said.
The report, citing one of the sources, said that even Infrastructure Leasing & Financial Services Ltd. (IL&FS) may also join the deal and put its shares on the block depending on the final bids. The infrastructure development and finance company owns a 5.9% stake in CARE, of which 3.4% is held by IL&FS Trust.
The three banks, hampered by non-performing assets on books, target to complete the sale of their stake in CARE by the end of March to bolster their balance sheet, Economic Times said.
The report, quoting another source, said that some of CARE's shareholders are seeking a price of about INR900 per share in the sale. Based on CARE's closing price on Friday, a potential buyer will have to spend at least INR673 crore for the 32% stake or as much as INR992 crore should they choose to bid for the 38% stake.
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