Shachindra Nath, who quit as the chief executive of financial services company Religare Enterprises Ltd in 2016, is taking control of a Mumbai-listed non-banking finance company and has roped in three private equity firms to raise funds.
Nath and Gurgaon-based Poshika Advisory Services LLP, an investment firm he owns, are acquiring Chokhani Securities Ltd from the company’s promoters and have also made an open offer to public shareholders, according to stock-exchange filings.
The deal also involves a merger of the lending business of another non-banking financial company, Asia Pragati Capfin Pvt. Ltd, with Chokhani via an all-stock transaction. Asia Pragati has an estimated asset value of about Rs 175 crore.
The merged company will subsequently receive up to Rs 430 crore from private equity firms ADV Partners, NewQuest and IndGrowth, according to a press release by Equirus Capital, which acted as the sole financial adviser for the transaction.
Once the entire transaction is completed, Nath and Poshika—the new promoters—will hold a stake of less than 10% in Chokhani Securities on a fully diluted basis. The remaining stake will be held by public shareholders, said the release.
As of September 2017, the promoter family of Chokhani Securities—Anand R Chokhani, Neelam R Chokhani and RamaKant R Chokhani—owned about 73.8% of the company.
Shareholders of Asia Pragati Capfin will get one share of the new company for every 13.65 shares held. Asia Pragati is owned by Pacific Alliance Group, a Hong Kong-based alternative investment firm that had acquired the NBFC in 2010 for about Rs 130 crore.
Nath will be appointed as the combined company’s managing director for five years effective from the date of approval from the Reserve Bank of India.
Nath was one of the key founding team members at Religare, controlled by brothers Malvinder and Shivinder Singh, and was associated with the company since 2000. He led the company’s initial public offering in 2007, formed joint ventures and built various businesses at the company from scratch.
He set up Poshika after leaving Religare. Poshika advises and invests in financial services companies. In April last year, it had invested in fintech startup MintWalk.
According to the stock-exchange filings, the board of Chokhani Securities has also approved increasing the company’s authorised share capital from Rs 6 crore to Rs 64 crore.
Among the PE firms, Indgrowth Capital Fund I will invest about Rs 45 crore by subscribing to fully compulsory convertible debentures.
Clearsky Investment Holdings Pte Ltd and NewQuest Asia Investment III Ltd will invest Rs 16.5 crore each via equity shares. Clearsky and NewQuest will also invest Rs 178.5 crore each via compulsory convertible debentures and compulsory convertible preference shares, respectively, the filings showed. Clearsky is an affiliate of ADV Partners.
Chokhani Securities is also considering raising Rs 250 crore by selling shares to institutional investors, the filings show.
Chokhani Securities had total assets of Rs 34.24 crore, a net worth of Rs 34 crore and annual revenue of Rs 2.3 crore as of March 2017. Asia Pragati Capfin had total assets of Rs 145.2 crore, a net worth of Rs 145 crore and annual revenue of Rs 9 crore.