Assuming CRISIL is an efficient allocator of capital, its investment in CARE exactly a year ago sends a very strong signal that the ROI in CARE is better than the internal ROI for CRISIL. If not a purely Capital allocation decision, it might very well have been a more strategic investment decision, which though has been rejected by CRISIL stating that
“The investment was made pursuant to a public bid process conducted by Canara Bank and is in compliance with all applicable laws and regulations,” Crisil said in an emailed reply to ET. “This is an investment. We are optimistic about the long-term growth prospects of the credit rating sector.”
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Of course this investment has not paid off yet, but one year is short term for an investment of this nature to pay back. Irrespective of motive, this is surely a capital allocation act - which is investing in business, but of a competitor. The end game here clearly has not played out yet.