The Reserve Bank of India has stopped the sale of Religare Enterprises Ltd’s NBFC arm Religare Finvest Ltd (RFL) and has asked the company to submit a revised proposal for the NBFCs revival, parent Religare Enterprises said in a statement.
On 1 October, Religare signed a share purchase agreement with TCG Advisory Pvt Ltd, part of Purnendu Chatterjee’s The Chatterjee Group (TCG). The sale of Religare Finvest and it’s housing finance subsidiary Religare Housing Finance Development Corp Ltd would have fetched Religare group around ₹330 crore.
“We would like to inform you that the RBI vide its letter dated March 20, 2020 addressed to RFL, has informed that the request seeking approval of acquisition of RFL by TCG from Religare Enterprises cannot be acceded to," the company said.
Religare added that under the share purchase agreement signed with TCG, the long stop date for the transaction was extended to 20 March, but since all the necessary conditions under the agreement had not been met till the long stop date, the agreement stands terminated.
RBI has further advised Religare to submit a revised proposal for revival of RFL, the statement said.
The proceeds from this stake sale were planned to be used by Religare to repay the outstanding loans to group companies, third parties and for other general corporate purposes.
Religare, which has been stung by controversies surrounding its erstwhile promoters, Singh brothers Malvinder and Shivinder, has been making efforts to raise capital through other stake sales too.
Private equity firm Kedaara Capital, in February, agreed to invest ₹400 crore in the group’s health insurance business. Kedaara is picking up Religare Enterprises stake worth ₹200 crore and will invest a similar amount directly in the health insurance company.
Interestingly, for the TCG group, this is the second failed attempt to expand its presence in the financial services business through an acquisition in the last 12 months. TCG currently runs an asset management company which manages offshore as well as domestic capital.
In February 2019, TCG Group emerged as the highest bidder for IDFC group’s broking and research business IDFC Securities after a round of bidding.
However, by July, both the parties called off their pact and the IDFC Securities business was eventually picked up by former Axis Capital managing director and CEO Dharmesh Mehta.
Founded by Purnendu Chatterjee in 1989, the TCG Group’s business interests span across petrochemicals, pharmaceuticals, biotech, financial services, real estate and technology sectors in the US, Europe and South Asia.