CARE Rating (NSE Code – CARERATING) was recommended to Alpha and Alpha plus members in Aug’13 when the stock was around 525. The detailed report on the same was also made public on 16th Nov’13 when the stock was around 700 (CMP – 850).
In case you have invested in CARE, here’s an important update regarding the latest developments in the company.
The Company recently informed exchanges that its principal shareholders, IDBI, along with four other shareholders, who hold more than 45% in the company are in the process of identifying a buyer for a potential sale of 11.1 million shares.
As per the news item in economic times, private equity funds, General Atlantic Partners, Actis, Baring Private Equity Partners Asia and Apax Partners are negotiating with the principle shareholders for a controlling stake in the company. The news item further states that deal is likely to happen in the price range of 900-1000.
It remains to be seen if any one entity buys out the entire stake or a group of funds buy the shares on offer because the same will also determine if there will be an open offer for public shareholders or not.
We don’t see any negative impact of the sale of shares by the principal shareholders, rather there could be re-rating in the stock (already underway) if any one of the above entities becomes the promoter because at the moment there’s no identifiable promoter of CARE Rating.
Further, with a PE fund acquiring the majority stake in the company, the Company will probably get more aggressive in expanding its research services and SME ratings business as these are the two areas CARE lacks in comparison to its counterparts CRISIL and ICRA.
Disclaimer: Our Alpha and Alpha + members have invested in CARE Rating around 525 odd levels. This report is being shared only for the purpose of information; do not construe the same as buy/sell advice. In case you invest in CARE Rating, please carry out your own due diligence.