Credit Bulletin
April 09, 2019 | Mumbai
Ratings to remain unaffected by sale of entire promoter holding
 
On April 7, 2019, NIIT Technologies Ltd (NTL) announced that its promoter, NIIT Ltd, and promoter family members would be selling their entire holding in NTL to Baring Private Equity Asia (Baring PE). NTL is an information technology (IT) services company providing end-to-end software solutions and services, and the proposed change in shareholding is unlikely to have a material bearing on its performance.
 
The transaction is expected to be completed by first half of fiscal 2020, and is subject to regulatory approvals. Total pay-out for 144.9 lakhs shares (23.10%) held by NIIT Ltd, and 43.5 lakhs shares (6.94%) of the founder's family members will be around Rs 2,600 crore. After the acquisition of around 30% stake, Baring PE will also make an open offer to acquire up to 26% stake from the public, entailing an outgo of up to Rs 2,300 crore.
 
NTL also announced acquisition of 53% stake in Whishworks IT Consulting at a cost of around Rs 280 crore (funded from internal surplus); the remaining 47% stake will be acquired over two years through pay-out linked to financial performance. Furthermore, the company is  divesting, its entire stake of around 89% held in its subsidiary, ESRI India Technologies Ltd (EITL), to the other existing shareholder, Environmental System Research Institute (ESRI) at a price of Rs 89 crore. EITL provides global information systems and application integration services.
 
The ratings on the debt programmes of NTL continue to reflect a healthy business risk profile, supported by a diversified revenue mix across geographies and verticals. The ratings also factor in a robust financial risk profile, backed by a strong capital structure and healthy debt protection metrics. These strengths are partially offset by an average scale of operations and exposure to intense competition in the IT industry.
 
For accessing the previous rating rationale, refer to the following link:
Company Name Link to rating rationale
NIIT Technologies Limited Click here
Note on complexity levels of the rated instrument:
CRISIL complexity levels are assigned to various types of financial instruments. The CRISIL complexity levels are available on www.crisil.com/complexity-levels. Users are advised to refer to the CRISIL complexity levels for instruments that they consider for investment. Users may also call the Customer Service Helpdesk with queries on specific instruments.
Links to related criteria
CRISILs Approach to Financial Ratios
CRISILs Bank Loan Ratings - process, scale and default recognition
Rating criteria for manufaturing and service sector companies
Rating Criteria for Software Industry
CRISILs Criteria for Consolidation

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