Religare sells 80% stake in health insurance arm to True North, others

Mumbai: Religare Enterprises Ltd on Sunday announced the sale of its 80% stake in Religare Health Insurance Co. Ltd (RHI) to a group of investors led by True North.

In a statement, Religare Enterprises said it has entered into a definitive agreement with the investors for the sale, which values the insurance firm at Rs1,300 crore. The deal will fetch Religare approximately Rs1,040 crore.

Apart from True North (earlier known as India Value Fund Advisors), other investors in the consortium are Aditya Parekh and Sameer Shroff-led private equity firm Faering Capital, and Gaurav Dalmia.

The transaction is subject to necessary regulatory approvals. American investment bank J.P. Morgan acted as the exclusive financial adviser to Religare Enterprises.

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Religare Health Insurance was launched in July 2012. The business reported a gross written premium of Rs503 crore in the year ended 31 March 2016.

“We have been closely evaluating the health insurance space and have been impressed by the quality of RHI’s management team and business. We believe that RHI would be an excellent platform for building an enduring health insurance franchise in India,” Vikram Nirula, partner at True North said in the statement.

True North has so far successfully launched five separate investment funds with a combined corpus of over $2 billion.

The stake sale comes at a time when Religare’s promoters Malvinder and Shivinder Singh have been reported to be keen on divesting stakes in other businesses controlled by them.

In January, Mint reported that the brothers were in talks with several global private equity funds such as TPG Capital, Bain Capital and KKR to sell a stake in their hospitals business—Fortis Healthcare Ltd. Discussions with Bain and TPG are currently only for a 26% stake in the company.

On 5 January, Mint had reported on the talks between KKR and the Singh brothers for a majority stake in Fortis, alongside a structured equity deal in RHC Holding Pvt. Ltd (RHPL). RHPL is the holding firm for the Religare and Fortis brands.

Singh brothers are also exploring debt financing options.

In November, Mint reported that RHPL was in talks to refinance $300 million debt. RHPL is a closely held investment company owned by Singh brothers. As of 31 March 2016, RHPL had a total net worth of around Rs6,900 crore and a debt of Rs4,064 crore.

The various stakes sale plans are, however, overshadowed by an ongoing legal battle with Japanese drug maker Daiichi Sankyo.

The case relates to enforcement of an arbitral award in proceedings initiated by Daiichi Sankyo against the Singh brothers in relation to its 2008 purchase of a majority stake in Ranbaxy, then owned by the brothers. The arbitral award came after the Japanese company alleged that the Singh brothers had concealed crucial information while selling Ranbaxy to it for $4.6 billion in 2008.

A Singapore tribunal has ordered the brothers to pay Rs2,562 crore, which they are contesting in the Delhi High Court.

In March, the court directed Singh brothers to furnish, within a week, details of all of their unencumbered assets, in order to ensure the use of such assets to satisfy the arbitral award, at a later stage, if required, Mint reported on 7 March.