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Edelweiss scraps deal to buy Religare’s securities business

16 March, 2018

Edelweiss Financial Services Ltd said on Friday it has terminated a deal to acquire Religare Enterprises Ltd’s retail broking business.

The agreement has ended due to Religare’s “inability to obtain the requisite clearances within the agreed timeline”, Mumbai-based Edelweiss said in a stock-exchange filing.

Edelweiss had said in December that its wealth management unit would buy Religare Securities Ltd, Religare Commodities Ltd as well as depository participant services subject to certain conditions. The total payout was likely to be around Rs 250 crore ($39 million).

The deal was expected to be completed by 15 March 2018.

The fresh development follows a stock-exchange disclosure by Religare Enterprises on 1 March that it was complying with a probe by Ministry of Corporate Affairs’ Serious Fraud Investigation Office into its operations.

In January, private equity firm Siguler Guff had filed a lawsuit accusing Malvinder and Shivinder Singh, the promoters of Religare Enterprises, for siphoning off close to $1.5 billion from Religare to finance their personal debt.

The stake held by brothers Malvinder and Shivinder Singh in Religare Enterprises dropped to 3.48% as of 9 February from 13.9% in December and will shrink to 1.7% after a proposed preferential allotment of shares.

Religare Enterprises said last month it would issue preferential warrants to 41 existing investors including private equity firm Bay Capital.

The Singh brothers now own only 0.77% stake in their other flagship business Fortis Healthcare compared with nearly 25% at the end of December, stock-exchange filings show.

In February, Religare Enterprises appointed Siddharth Mehta, founder of Bay Capital, to its board.

It also added former Reserve Bank of India executive director P Vijaya Bhaskar and former Bank of America executive Vikram Talwar to its board. Besides, it named independent director Ashok Mehta as its interim CEO.

Bay Capital is the single-largest non-promoter shareholder in Religare Enterprises with nearly 10% stake.

Religare Enterprises has sold many of its units and businesses over the past two years.

The divestments are a part of its consolidation and restructuring strategy, under which the diversified financial services company has wrapped up its global operations and aiming to focus on the India businesses.

In April 2017, Religare Enterprises sold its health insurance business to a consortium of investors led by private equity firm True North Managers LLP.

In February 2017, it sold the wealth management business to Mumbai-based Anand Rathi Group.

In August 2016, Religare Enterprises sold its real estate private equity arm, Cerestra Advisors Ltd, to TCP for an undisclosed amount.

In April 2016, the firm had said it would sell its US private equity and venture capital management arm Northgate Capital to London- and Dubai-based private investment firm The Capital Partnership (TCP).

The same month, it had also exited Landmark Partners, another US-headquartered private equity fund house.

In November 2015, it sold a majority stake in its Indian asset management joint venture, Religare Invesco Asset Management Company, to foreign partner Invesco Ltd.

Besides, Religare Enterprises sold its stake in the life insurance joint venture with Bennett Coleman and Co Ltd, the media conglomerate better known as Times Group, and foreign partner Aegon.

It is also engaged in talks to sell its core business of lending.

As reported by VCCircle last year, Religare Finvest, the NBFC arm of Religare Enterprises, has received bids from its peers such as Clix Capital, Edelweiss Financial Services Ltd, JM Financial and Essel Finance for a potential acquisition.

The NBFC had also elicited interest from bigwigs in the private equity space, such as Standard Chartered PE, TPG and Actis.

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Edelweiss scraps deal to buy Religare’s securities business

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