Religare to sell NBFC, housing finance unit to TCG; shares jump

By Narinder Kapur

  • 11 Jul 2019
Religare to sell NBFC, housing finance unit to TCG; shares jump
Credit: VCCircle

Religare Enterprises Ltd, a diversified financial services group, has entered into a binding term sheet to sell its small and medium enterprise (SME)-focused non-banking financial company (NBFC) and housing finance unit to asset management company TCG Advisory Services Pvt. Ltd.

Reacting to the news, Religare Enterprises’ shares on Thursday hit the upper circuit. The stock rose 10% to Rs 43, which is the highest in over nine months. 

In a filing with stock exchanges, Delhi-based Religare Enterprises said it will divest its entire stake in Religare Finvest Ltd, through which TCG will also indirectly acquire Religare Housing Development Finance Corporation Ltd. The deal amount was not disclosed.

According to the filing, Religare Finvest reported total revenues of about Rs 796 crore for the financial year ended March 2019, while Religare Housing reported about Rs 130 crore during the period. 

Religare Enterprises said the sale, subject to statutory and regulatory approvals, is expected to close before the end of the calendar year. 

Religare Enterprises added that the sale of Religare Finvest and Religare Housing will also help with the former’s debt-resolution process. Religare Finvest chief executive Sanjay Palve said, “Following this transaction and the implementation of the debt-resolution plan of Religare Finvest, I am positive of a great future for Religare Finvest and Religare Housing.” Palve is also managing director of Religare Housing. 

According to its website, Religare Finvest says its vision is to support SME growth. The firm says it provides customised solutions to its clients, with its products including working capital loans, secured business-expansion loans and short-term trade finance. Religare Finvest has 32 branches and says its loan book size stood at over Rs 13,716 as on 31 March 2017.

Religare Housing says it provides a wide array of services, ranging from home loans and home-improvement loans to home-extension loans and self-construction loans. The company’s loan size ranges from Rs 2 lakh to Rs 50 lakh, with a maximum tenure of 20 years. 

Founded in 1989 by NRI entrepreneur Purnendu Chatterjee, TCG is a US-based private equity firm with investments and operations spanning several continents and industries. It prefers to invest in petrochemicals, pharmaceuticals, biotech, financial services, real estate and technology sectors in the US, Europe and South Asia. TCG AMC (Asset Management Company) is led by Chakri Lokapriya.

Religare’s woes

The sale move comes even Religare Enterprises continues to deal with the fallout of the Fortis-Religare fraud case. In December last year, Religare Enterprises and Religare Finvest filed a complaint against former Religare Enterprises chief Sunil Godhwani and the group’s erstwhile promoters Malvinder Mohan Singh and Shivinder Mohan Singh. The complaint stated that Religare Finvest had sanctioned loans to companies known to the Singh brothers but were never repaid. The loans to 19 entities are worth Rs 2,397 crore, with Rs 415 crore as interest.

In February this year, the Delhi police filed a case against Godhwani and the Singh brothers on charges of cheating, criminal conspiracy and breach of trust. The police took Godhwani into custody in May, stopping him from boarding an overseas flight from a Delhi airport.

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