The proposed merger of credit rating agencies Icra Ltd and Credit Analysis and Research Ltd (Care) has been called off. "The merger will now not take place," Icra managing director P K Choudhury told Business Standard. He, however, refused to comment on the reasons for calling off the proposed merger.
Both the Industrial Development Bank of India, the promoter of Care, and IFCI, the principal shareholder in Icra, had earlier given a go-ahead for the merger. The only issue left to be resolved included representation of all the claimants in the new entity, particularly Moody's. In addition, the matter had been complicated for the promoters with the worldwide merger of Fitch Ipca (which has a technical tie-up with Care) and Duff and Phelps (which is the third largest rating agency in India), since Moody's is a competitor to Duff and Phelps in the international market.
Moody's Investor Services is the second largest shareholder in Icra Ltd after IFCI which owns a 26 per cent stake. In 1999, it had acquired an 11.36 per cent stake in Icra Ltd for a consideration of Rs 6 crore. The shares in Icra Ltd are held by Moody's Investment Company India (Pvt) Ltd.
Apart from IFCI and Moody's, the shareholders of Icra Ltd include State Bank of India, Punjab National Bank and Central Bank of India, insurance companies Life Insurance Corporation and General Insurance Corporation of India, Housing Development Finance Corporation of India and Infrastructure Leasing & Financial Services Ltd.
IDBI and Canara Bank each hold a 26 per cent stake in Care. Crisil which has an equity tie-up with the world's largest rating agency - Standard and Poor's - is the largest rating agency in the country, at present.
Apart from the equity stake, Icra Ltd has a technical services agreement with Moody's which entails Moody's providing certain high-level technical services to Icra Ltd. Specifically, the agreement is aimed at helping Icra's in-house research capabilities and provide it access to Moody's global research base. Under the agreement, Moody's also provided training to Icra analysts.
Icra has also been working with Moody's Risk Management Services, a subsidiary of Moody's Investors Services, for extending state-of-the-art technology in credit risk management for banks and other lenders.
