Financial services company Religare Enterprises Ltd, which has been selling its assets to pare debt, has found a new investor for its health insurance unit a couple of years after a previous deal with private equity firm True North collapsed.
Homegrown private equity firm Kedaara Capital will invest Rs 400 crore ($56 million) in Religare Health Insurance Company Ltd, Religare Enterprises said on Friday.
Kedaara will spend Rs 200 crore to buy part of Religare Enterprises’ stake in the health insurer and infuse an equal amount as fresh capital. It will also have an option of investing another Rs 100 crore.
Religare Enterprises said in a stock-exchange filing that its stake in the health insurer will fall to 76.18% after the transaction is completed from the current 88.95%.
Anuj Gulati, managing director and CEO at Religare Health Insurance, said the transaction will enable the healthcare insurance unit to increase its investment in technology, distribution and service capability.
Rashmi Saluja, non-executive chairperson at Religare Enterprises, said that the deal will help strengthen its position in the financial services business and enable it to achieve its aim of becoming a debt-free company by June 2020.
The transaction is subject to regulatory approval and is expected to be completed by 31 March 2021.
The deal with Kedaara comes a little less than three years after Religare agreed to sell the health insurance unit to a group of investors led by PE firm True North. However, that deal later collapsed.
Religare Enterprises has been drawn regulatory ire over the years for financial embezzlement by its promoters Malvinder and Shivinder Singh brothers, whose stake has now been reduced to around 1%. The group has been offloading its assets to restructure its business and pare debt.
In October last year, Religare Enterprises said it will sell its entire stake in non-banking financial company Religare Finvest Ltd to asset management firm TCG Advisory Services Pvt. Ltd for Rs 330 crore ($46.5 million).
Earlier the group sold its flagship pharma firm Ranbaxy, venture capital arm Northgate Capital, private equity fund house Landmark Partners, real estate private equity arm Cerestra Advisors Ltd and insurance JV Religare Invesco Asset Management Company.
The healthcare insurance space has seen some big-ticket deals.
Just last month VCCircle reported that ROC Partners, which was created with a management buyout of Macquarie’s private markets business unit five years ago, was set to invest in India's top health insurance firm Star Health & Allied Insurance Co. Ltd.
In February last year, True North said it will acquire a 51% stake in Max Bupa Health Insurance Company for Rs 511 crore ($72 million) in cash after its deal with Religare Enterprises fell through.
The PE firm is operationally-oriented and pursues control and minority investment opportunities focused on India. It was established in 2011 by former Temasek chief Manish Kejriwal, ex-General Atlantic managing director Sunish Sharma and principal Nishant Sharma.
In June last year, VCCircle reported that Kedaara Capital was set to ink its first deal in close to a year by purchasing a significant stake in a privately held construction equipment manufacturer.
VCCircle also first reported that the PE firm had sealed its first investment in a new-age technology firm by investing in Lenskart last year.
In May 2018, to enhance its exposure in the retail space, Kedaara and Global investment firm Partners Group agreed to acquire Gurugram-based Vishal Mega Mart Pvt. Ltd from private equity firm TPG. While the deal value was not disclosed, multiple media reports had pegged the valuation at around Rs 5,000 crore.
The PE firm has also recorded partial exits by listing a handful of its portfolio companies such as Mahindra Logistics, AU Financiers and Aavas Financiers.