Icra plans to float IPO

Icra Ltd, the country's second largest rating agency, is drawing up plans for its initial public offer (IPO). After Crisil Ltd, Icra would become the second rating agency to get listed.

The proposed IPO is likely to be a combination of fresh issue of shares and offer for sale by one of its shareholders, the Specified Undertaking of Unit Trust of India (SUUTI). SUUTI holds about 7 per cent stake in Icra.

"Nothing has yet been finalised. Various options are being explored," said a source familiar with the development.

Managing director PK Chowdury said there could be some preliminary discussion (on the proposed IPO) but he had no knowledge of the development.

Sources said the stake holders have initiated preliminary talks on the IPO and the finance ministry was aware of this. Global rating agency Moody's Investors Service is the largest shareholder in Icra.

Crisil, the first Indian rating agency launched by domestic financial institutions and banks, was last year acquired by US-based international rating agency Standard & Poor's.

"It's a complex issue as the government may not like both the country's premier rating agencies to be managed by global entities. Once Icra gets listed, it will not be difficult for Moody's to acquire a majority stake by making an open offer in due course," said an industry analyst.

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 hold stakes in Icra.

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

SUUTI, which holds equity stakes in various entities, has set March 31, 2006 as the deadline for selling all its investments including its holding in Icra. Sources said there could be a delay in divesting the SUUTI stake in Icra as the rating agency is planning to combined this with an IPO.

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.

Moody's Investment Company India acquired an additional 9 per cent stake in Icra in September 2001 to become the largest shareholder.