Now we know where the Singh family is putting its money. Delhi based financial services group Religare Enterprises Limited (REL), whose promoters are Singhs of Ranbaxy, has announced a Rs 1,800 crore rights issue. The promoters have given their commitment to subscribe for the
unsubscribed portion, the statement issued by the firm added. Ranbaxy Pharmaceutical’s Singhs signed a deal with Japanese pharma company Daiichi Sankyo in June this year to sell their 34.8% stake in the company for Rs 9,576 crore. As part of this sales, the Singhs recently sold 19.48% stake for Rs 6,037 crore.
Religare has a presence in equity broking, wealth management and investment banking. Religare’s rights issue will be in a 2:3 ratio, wherein two equity share would be issued for every three shares held. The issue is priced at Rs 355 a share, higher than its closing price of Rs 328 on
Wednesday. The firm presently enjoys a market capitalisation of nearly 2,500 crore. With the rights issue, Singhs will be able to pump more money into their financial services empire and may also increase their stake in the company. The Singhs currently have a 54% stake in Religare.
Several rights issues in the recent past have run into rough weather. Recently wind turbine maker Suzlon scrapped its Rs 1,800 crore rights issue, and is now looking for private equity funding. The other big ticket rights issues such as Hindalco and Tata Motors also failed to enthuse the investors, with promoters and underwriters bailing out the issue. Other companies who are planning their rights issues are Tayo Rolls, Dish TV and ECE Industries. But with Singhs planning buy any excess shares, Religare’s issue should not have many problems.
Religare has a joint venture with Macquire in wealth management, called Religare Macquarie Wealth Management, which is set for major expansion with the promoters recently announcing a $25 million infusion to expand local operations. It also has an insurance joint venture called Aegon Religare Life Insurance Company between Religare Enterprises, Dutch insurer Aegon and media house Bennett, Coleman and Co. Ltd. The firm is also planning a private equity foray and has incorporated an entity for the same called Religare Venture Capital.