Brickwork joins list of raters

First south India-based agency plans to rate loans of public sector banks.

The country is to have its fifth credit rating agency, with the Securities and Exchange Board of India (Sebi) licensing Brickwork Ratings, led by Managing Director Vivek Kulkarni and founder Director N Balasubramanian.

Bangalore-based Brickwork will be joining the existing players, Crisil, Icra, Fitch and Care, making it the first rating agency from the South. The other four agencies are located in Mumbai, Delhi and Kolkata.

Brickwork will seek to differentiate itself as a national player with ballast as three of the four existing players have strong overseas linkages and Care has remained a marginal player. Fitch is a part of the global entity, while Crisil is majority owned by S&P and Icra's largest shareholder is Moody's.

"A global tag is usually an asset, but I do not know what mileage that brings in this sector at the time of the sub-prime crisis when so many triple-A-rated papers quoting at massive discounts," said Kulkarni.

He does not feel that Brickwork will be entering a crowded field as the growth of rating in India can be clearly traced to the exercise being made mandatory for debt paper in the early nineties. In the last couple of years, rating of IPOs and bank assets has been made mandatory, but the existing players have not picked up much traction in these areas.

Brickwork will initially offer standard products such as rating of short- and long-term fixed income paper, structured products, IPOs and bank loans. Over time, it will offer rating services for corporate governance, real estate and healthcare services.

Brickwork is initially being funded by its two promoters, though over time, it will seek outside funding to build scale in its information system, knowledge base and research.

Kulkarni, who was Karnataka's IT secretary when he left for the private sector, has since headed knowledge-based outsourcing operations. He has over time worked with Sebi, heading its primary market operations, and Crisil, heading its advisory services. He is on the board of the Bombay Stock Exchange and an MBA from Wharton.

Balasubramanian, who will be heading Brickwork's Mumbai operations, is a product of IIM Ahmedabad. He was CMD of Sidbi and instrumental in starting the small and medium business rating agency Smera. (It is not registered with Sebi.)