S&P raises offer price for Crisil

Revised price fixed at Rs 775 per share.

US rating agency Standard & Poor's (S&P) today raised by 13.97 per cent the price of its conditional open offer to the shareholders of Crisil Ltd.

The revised price of Rs 775 per share is 9.92 per cent more than the scrip's closing price of Rs 705 on the Bombay Stock Exchange on Friday. S&P had made the first open offer on February 17 at Rs 680 per share. April 11 was the last date for revising this offer.

S&P also increased the size of its offer to a maximum of 65.57 per cent (or 41,70,562 shares) of Crisil's fully paid-up equity from 55.5 per cent earlier. S&P already holds a 9.45 per cent stake in Crisil and a successful completion of the latest offer will lead to its stake rising to 75 per cent, the delisting threshold.

It will also cost the company Rs 323 crore. The condition that S&P must receive a minimum of 41.55 per cent of Crisil shares remains. None of the shares tendered will be accepted if the subscription to the offer is less than the minimum threshold.

"The new offer, together with the increased size, provides a larger number of shareholders the opportunity to utilise what we consider an attractive exit," said Kathleen A Corbet, president of S&P.

Corbet said S&P revised the price as the offer was a conditional one and also the ratings agency wanted to ensure it achieved its stated goal.

Sources in the state-owned financial institutions, which are among the promoters of Crisil, said they would collectively decide on their response to the open offer. The need for consultation arises because the offer is conditional to receiving subscription of a minimum of 41.5 per cent shares.

The institutions are waiting for the April 11 deadline for revision in the open offer.

An executive of a bank, which is one of the promoters of Crisil, said the revised price is very attractive and "in all probability we will tender our shareholding". The book value of Crisil is much below even the initial offer price of Rs 680 in the case of almost all institutional investors.

S&P's stake in Crisil will increase to 51 per cent if the ratings agency gets the minimum number of shares and to 75 per cent if the maximum number of shares are tendered under the open offer. S&P will pay an aggregate of Rs 323.31 crore if its gets the maximum 65.57 per cent of CRISIL shares under the offer.

US-based The McGraw-Hill Companies, on behalf of its Standard & Poor's division, has made the voluntary conditional open offer. The offer opened for subscription on April 6 and will close on April 25.

Kotak Investment Banking is the financial advisor to McGraw-Hill and manager to the offer.

The public holding in Crisil is 25.92 per cent, of which 14.30 per cent is held by stock broker Rakesh Jhunjhunwala and his wife. Foreign institutional investors have 25.51 per cent.

ICICI Bank has a 10.77 per cent stake, Unit Trust of India-II 8.43 per cent, Life Insurance Corporation 3.17 per cent, State Bank of India 3.15 per cent, Canara Bank 1.54 per cent, United India Insurance Company 1.11 per cent and Central Bank of India 1.09 per cent.

The revised price is at a premium of 55.74 per cent over the 26-week statutory price and at a 34.53 per cent premium over the two-week statutory price.

The share price of Crisil had spurted to a new 52-week high of Rs 720 on Wednesday and Thursday amid talk that S&P would revise the offer price.

Crisil has been a very thinly traded stock. On March 31, 2005, a total of just 431 shares were traded on the Bombay Stock Exchange and had closed at Rs 678.