McGraw Hill Offers $334 Million to Boost Indian Rater Stake

McGraw Hill Financial Inc. (MHFI), owner of Standard & Poor’s, offered $334 million to boost its stake in Indian credit rater Crisil Ltd. (CRISIL) to 75 percent, sending Crisil’s shares soaring by the most in more than eight years.

The Mumbai grader climbed 20 percent to a record 1,129.9 rupees, the biggest daily gain since February 2005. McGraw Hill is seeking to buy as many as 15.67 million shares of Crisil at 1,210 rupees ($21.37) each, 29 percent more than the stock’s May 31 close, according to a company statement distributed by PRNewswire.

Crisil competes with ICRA Ltd. (ICRA), in which Moody’s Corp. holds a 28.5 percent stake, to provide ratings to borrowers in Asia’s third-biggest economy. Crisil’s revenue has increased at an average rate of 19.3 percent in the last five years, the New York-based firm said today.

“In 10 years, the rating business will be a booming market in India,” A.K. Prabhakar, senior vice president of equity research at Mumbai-based Anand Rathi Financial Services Ltd., said today. “Financial regulation will be stricter, there will be more banks and financial products then.”

Shares of McGraw Hill were little changed at $54.65 as of 10:48 a.m. in New York trading. The deal would increase the company’s stake in Crisil from 52.8 percent. The tender offer to shareholders is expected to start next month and end in August, according to the statement. McGraw Hill will finance the deal using cash.

Staying Public

McGraw Hill plans to keep Crisil “a listed, public, independent company,” Chief Executive Officer Harold “Terry” McGraw III said in the statement. The offer “represents a vote of confidence in the growth prospects of India and the other markets that Crisil serves.”

Crisil, India’s first credit-rating company, was set up in 1987 by financial institutions including ICICI Ltd. and Unit Trust of India, according to its website. S&P, the world’s largest credit rater, bought a controlling stake in Crisil in 2005.

McGraw Hill, which changed its name from McGraw-Hill Cos. last month, sold its education unit to Apollo Global Management LLC for $2.4 billion in March.

To contact the reporters on this story: Anurag Joshi in Mumbai at ajoshi53@bloomberg.net; Matt Robinson in New York at mrobinson55@bloomberg.net

To contact the editors responsible for this story: Katrina Nicholas at knicholas2@bloomberg.net; Alan Goldstein at agoldstein5@bloomberg.net

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