The Reserve Bank of India has rejected Religare Enterprises Ltd’s plan to sell its non-banking finance arm to asset management firm TCG Advisory Services Pvt. Ltd and asked it to submit a revised revival plan for the unit.
The central bank’s decision means the sale of Religare Finvest Ltd couldn’t be completed by the March 20 deadline and so the transaction has been terminated, Religare Enterprises said in a stock-exchange filing.
Religare Enterprises had, in October, said it would sell Religare Finvest to TCG, part of Purnendu Chatterjee’s The Chatterjee Group (TCG), for Rs 330 crore. The deal was subject to regulatory approvals and other conditions.
Religare Enterprises didn’t specify the reason why the RBI rejected the transaction.
The financial services firm has been trying to revive itself after erstwhile owners, the brothers Malvinder and Shivinder Singh, lost control of the company about two years ago.
Religare has been making efforts to raise capital by selling several businesses and assets. It had planned to use the proceeds from the sale of Religare Finvest to repay the outstanding loans to group companies, third parties and for other general corporate purposes.
Last month, private equity firm Kedaara Capital agreed to invest Rs 400 crore ($56 million) in the group’s health insurance business, Religare Health Insurance Company Ltd. After the transaction, Religare Enterprises’s stake in the health insurer arm will fall to 76.18% from 88.95%.
Religare Finvest is now being revived by a new management team led by Sanjay Palve, a banking veteran who is managing director and CEO at the company and its wholly owned unit Religare Housing Development Finance Corp.
Religare Enterprises, through various units, offers loans to small and medium-sized enterprises, affordable housing loans, health insurance services and retail broking services.