India: Asset management firm TCG acquires Religare Finvest

Photo: Mint

Financial services company Religare Enterprises Ltd on Thursday announced the sale of its non-banking financial company (NBFC) arm, Religare Finvest Ltd (RFL), to asset management company TCG Advisory Services Pvt. Ltd.

As part of the deal, Religare Housing Development Finance Corp. Ltd (RHDFC), the housing finance subsidiary of Religare Finvest, will also change hands.

In a stock exchange filing, Religare Enterprises said it has signed a binding term sheet to sell all its stake in Religare Finvest. The size of the transaction was, however, not disclosed. Shares of Religare Enterprises shot up 10% on the BSE, following the news of the stake sale, closing at ₹42.95, the highest in over nine months.

According to the filing, Religare Finvest reported total revenues of about ₹796 crore for the fiscal year ended March 2019, while Religare Housing reported revenues of about ₹130 crore during the period.

Religare Finvest chief executive Sanjay D. Palve said the deal will help get rid of its liabilities. Calling it a “win-win” situation for both Religare Enterprises and TCG Advisory Services, he said: “This will create value for Religare shareholders. The group can focus on other businesses. Whatever capital we have raised can be deployed in other business.”

The new board Religare Enterprises has been working to build the company around four businesses—insurance, small and medium enterprise (SME) lending, housing finance and broking.

Religare Finvest has been in news for all the wrong reasons. In February 2018, boards of both Religare Enterprises and Religare Finvest were reconstituted after the Singh brothers exited the company. The new Religare Finvest board said ₹740 crore was siphoned off from the company and misappropriated through loans to entities controlled by, connected to or known to, the Singh brothers and their associates.

According to Palve, Religare Finvest is expected to close the transaction as early as possible. “After meeting our capital requirements, we will figure out if we want to diversify. It’s too early to comment on it,” he said.

Palve said with debt under control, Finvest is now looking at restructuring. “We have to go for restructuring. With the new management and investor coming in, it will be a new positive for the banks, the regulator will also review it positively. We will be able to grow in our other businesses and we look forward to a great future for these businesses. Further, we are confident that through this transaction, we will be able to capitalize both RFL and RHDFC, to achieve growth in the high potential SME and affordable housing sectors,” he added.

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