SBI may hold on to Crisil stake

ICICI Bank has decided to sell its entire 10.77% holding under the offer.

The State Bank of India (SBI) is unlikely to offer its 3.15 per cent stake in Crisil in the revised conditional open offer by Standard and Poor.

However, ICICI Bank has decided to tender its entire holding under the new offer. The bank holds 10.77 per cent in the country's largest rating agency.

Sources in the know of developments said SBI would not participate in the open offer as the bank wanted to remain associated with the rating agency.

The bank also expects Crisil's global business to expand once S&P takes a controlling stake. ICICI Bank, however, finds the revised price offering very attractive.

The Life Insurance Corporation (LIC), along with the Specified Undertaking of the Unit Trust of India (Suuti or UTI-I), had submitted a joint report to the government, seeking an official nod from the finance ministry, said the institution.

UTI-I's exit from Crisil will be the first sale of what is construed as "sensitive sector holding". LIC holds a 3.17 per cent stake, while UTI-I, along with UTI Mutual Fund, holds 8.43 per cent in Crisil. Shares belonging to retail investors have started trickling in.

However, as this segment makes up about 10 per cent, financial institutions, foreign institutional investors as well as broker and high networth individual Rakesh Jhunjhunwala, who holds over 14 per cent in Crisil, will hold the key.

When contacted, Jhunjhunwala said he had not been able to come to a decision on selling his holding. "I will be able to do so only on the last day," he told Business Standard.

Global rating agency S&P on Sunday revised upward the price of its conditional open offer for Crisil by 13.97 per cent to Rs 775 a share. S&P also increased the size of its offer to a maximum of 65.57 per cent (or 4,170,562 shares) of Crisil's fully paid-up equity from 55.5 per cent earlier.

"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 conditional and also the rating agency wanted to ensure it achieved its stated goal.

SBI, however, feels otherwise and intends to hold its stake.

S&P's stake in Crisil will increase to 51 per cent if the rating agency is able to mop up the minimum number of shares, and up to 75 per cent should majority of the shareholders choose to tender their holdings.

In that event, S&P will pay an aggregate sum of Rs 323.31 crore, which will see its holding rise to 75 per cent after the offer.