Religare Enterprises is entering the housing finance business. The Delhi-based financial services conglomerate has acquired a controlling stake of 87.5% in Maharishi Housing Development Finance Corporation (MHDFC). The firm will infuse Rs 93.09 crore in city-based MHDFC, which has a National Housing Bank (NHB) license. Religare has been promoted by the Singh family, which till recently owned Ranbaxy Laboratories.

MHDFC will become a subsidiary company of Religare. The share price of Religare jumped by 5.35% to Rs 485.45 at the close of markets today. The Sensex was up by 2.3% to 14,624 points.

The deal comes a week after Dawnay Day, in which private equity firm New Silk Route has a majority stake, picked up a 26% stake in housing finance subsidiary of Punjab National Bank (PNB). Dawnay Day has the option to up its stake to 49% through fresh issue of shares in the


"Housing finance fits well with our overall plans and our lending business strategy of Religare. Available data shows a huge gap between demand and supply in the Indian housing finance market, there is big potential for business growth as one tries to meet demand," said Sunil Godhwani, CEO & MD of Religare.

The 10th five year plan says that there is shortage of 22.4 million housing units in India. Also contribution of housing finance to the Indian economy is only 6%, as compared to developed countries like US (80%) and Hong Kong (32%), according to a recent Asian Development Bank report.

ICICI Bank, HDFC Bank, IDBI Home Finance, Dewan Housing Finance Corporation, LIC Housing Finance, etc are some of the major players in this space. Foriegn financial service firms also have an interest in this space. BNP Paribas, AIG Capital, Barclays and Societe Generale are some of the firms who have bought substantial stakes in local housing finance firms. Private equity major Carlyle also picked up a stake in Chennai-based Repco Home Finance, a subsidiary of Repatriates Co-operative Finance and Development Bank, recently.

Religare has been looking to aggressively expand its financial services business. The firm has tied up with Australian banking giant Macquarie to bid for American International Group’s (AIG) investment unit. Religare has a wealth management JV with Macquarie in India. It is also reported to be in talks with Swiss Re, the world's second-largest reinsurer, for a health insurance JV. Religare runs a life insurance JV with Aegon.

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