Moody's to get Icra pref shares

Icra Ltd, the country's second largest rating agency and an associate of global rating agency Moody's Investors Service, will make a preferential allotment to Moody's ahead of its initial public offer (IPO).

This will be done to raise its paid-up equity base to Rs 10 crore from the current level of Rs 8.8 crore. It will also offer stock option to its employees.

The Securities and Exchange Board of India's (Sebi) listing regulations require that a company must have an equity base of Rs 10 crore to be eligible to go for a public float. The preferential allotment will be made at the IPO price.

IFCI and Administrator of specified undertaking of Unit Trust of India (SUUTI) which hold about 8 per cent and 22 per cent, respectively, in Icra will sell their stakes to the public through the IPO.

After Crisil Ltd, Icra would become the second rating agency to get listed.

The proposed IPO is likely to hit the market in August. Main promoters of Icra and merchant bankers to the issue had their first meeting in Mumbai on Tuesday. Icra Chairman DN Ghosh and Managing Director PK Chowdhury attended the meeting.

Moody's, IFCI and SUUTI apart, other promoters include State Bank of India, Life Insurance Corporation of India, Punjab National Bank, General Insurance Corporation of India, Central Bank of India, Allahabad Bank, Indian Bank, Canara Bank, UCO Bank, Andhra Bank and Oriental Bank of Commerce.

Despite the preferential allotment, there would not be any substantial change in Moody's stake, sources said. It is the largest shareholder in Icra holding about 28 per cent stake now.

IFCI and SBI are the other two stake holders which hold more than 10 per cent stakes each in the company Crisil, the first Indian rating agency launched by domestic financial institutions and banks, was last year acquired by US-based international rating agency Standard & Poors.

In addition to rating services, ICRA provides information, grading and research services, advisory services, economic research and outsourcing.

In 1999, Moody's and Icra had announced the final agreement for the global rating agency to make the initial equity investment and provide technical services to Icra.