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Business News/ Companies / People/  Religare promoters Malvinder and Shivinder Singh seek to exit
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Religare promoters Malvinder and Shivinder Singh seek to exit

Malvinder and Shivinder Singh have a 50.93% stake in Religare Enterprises; the deal could be valued at nearly Rs3,400 crore

A file photo of Malvinder Singh (left) and Shivinder Singh. Photo: Hindustan TimesPremium
A file photo of Malvinder Singh (left) and Shivinder Singh. Photo: Hindustan Times

Malvinder Singh and Shivinder Singh, the promoters of Religare Enterprises Ltd (REL), have put their stake in the financial services group up for sale, said three people familiar with the development, including a potential investor who was approached for the deal.

The promoters own a 50.93% stake in REL, which is the holding company for all its financial services businesses.

At the current market price, the deal could be valued at nearly 3,400 crore.

“They have been in the market for the last 2-3 months and have been scouting for buyers. But they haven’t been able to receive very good response as people don’t want to buy the entire gamut of assets but a few selective ones," said one of the two persons mentioned above.

“…some of the businesses which people are keen to take away are the insurance and non-banking financial services (NBFC) business, which are performing well," the person added on condition of anonymity.

On Monday, The Economic Times reported that private equity funds Baring Private Equity Asia, Bain Capital and Multiples Alternate Asset Management Pvt Limited are in discussion to acquire the promoters’ stake.

“Your line of questioning is absolutely speculative and baseless to say the least," Subhrangshu Neogi, director–marketing & brand, REL, said in response to emailed queries from Mint. “As clarified earlier to other media houses, we would like to reiterate that there is no plan for selling any asset/s. As the holding company for a large diversified financial services group, Religare Enterprises Limited (REL) remains committed to all its businesses; structured around the 4 core pillars of SME finance, capital markets & wealth management, health Insurance and asset management. Each business is unique, well differentiated and is in their respective stages of evolution.

“We would like to strongly suggest and put on record that if any such story is attempted and done by the Mint newspaper, we shall be prompted to take suitable and appropriate legal action," Neogi added.

A spokesperson for the company said separately that the board of REL had approved the raising of up to 1,000 crore through issuance of equity or equity-linked instruments in July last year.

The company keeps exploring “various strategic alternatives from time to time, with a view to raise primary capital for funding growth and also diversifying its shareholding by introducing new institutional investors within its fold," said the spokesperson.

The promoters have put both options—a complete exit and a partial stake sale—on the table, said a second person, a potential investor, on condition of anonymity.

“They have hired a foreign investment bank to sell their stake and have been meeting with global buyout funds and assessing the valuations they can fetch for the asset," said this person.

The third person quoted above confirmed that bankers had pitched the deal to global private equity funds.

REL shares rose 2.51% to 375.90 apiece on BSE on Monday as the benchmark Sensex ended 1.77% higher at 27,490.59 points.

REL has a bouquet of financial services offerings, including insurance, alternative asset management, small and medium enterprise finance and capital markets and wealth management units.

According to a presentation on 3 February, the firm generates 48% of its revenue from its lending business, 11% each from capital markets and wealth management and insurance businesses and the rest from asset management.

For the quarter ended 31 December, REL reported a consolidated net profit of 93.3 crore compared with a loss of 23.6 crore in the same quarter last year. Consolidated revenue was at 1,133 crore in the December quarter compared with 893.5 crore in the same quarter the previous year. The company is yet to release earnings for the March quarter.

In 2012, the firm had raised money from private equity investor Jacob Ballas Capital India Pvt. Ltd and Avigo Capital. Jacob Ballas had invested 200 crore and Avigo Capital paid 150 crore to acquire a stake in the firm.

Over the last few years, the firm has been focusing on its alternative asset management business which it runs under RGAM Investment Advisers Pvt. Ltd and has assets under management (AUM) of about $20 billion, according to an investor presentation dated 3 February available on the firm’s website.

It has been launching various sector-focused private equity and debt funds to invest in the country. Last year, it was planning to launch an offshore debt real estate fund of $100 million.

“There has been a lot of euphoria and mergers and acquisition activity that is being talked about but on ground level they have not resulted in any concrete results. Except for NBFC lending to retail, none of the businesses have really picked up as much as people were expecting," said Anil Singhvi, founder and chairman at Ican Investment Advisors, a boutique investment bank based out of Mumbai.

“People have earlier entered at higher valuations but investors are now not willing to pay as much. The fund-raising environment is still challenging and deals are taking time to close due to valuation mismatch," Singhvi added.

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Published: 04 May 2015, 02:36 PM IST
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