True North-led consortium to buy out Religare Health Insurance

Diversified financial services group Religare Enterprises has entered into a definitive agreement to sell off its health insurance subsidiary Religare Health Insurance Company Ltd to a consortium of investors led by private equity firm True North Managers LLP.

The sale will be subject to necessary regulatory approvals.

VCCircle had first reported on 26 October that Religare Enterprises was in talks with True North (formerly India Value Fund Advisors) to sell its stake in Religare Health.

The investors’ consortium includes homegrown PE firm Faering Capital Pvt Ltd and Gaurav Dalmia, the executive vice chairman, MD and CEO of Landmark Holdings (Dalmia Group).

The deal values Religare Health at Rs 1,300 crore ($200 million). The parent company currently owns 80% stake in the subsidiary. JP Morgan acted as exclusive financial advisor to Religare Enterprises on this transaction.

Launched in July 2012, Religare Health had reported a gross written premium of Rs 503 crore for 2015-16.

“We have been closely evaluating the health insurance space and have been impressed by the quality of the company’s management team and business. We believe it would be an excellent platform for building an enduring health insurance franchise in India,” said Vikram Nirula, partner at True North.

Maninder Singh, who was appointed as the group chief executive officer of Religare Enterprises a few weeks ago, said: “This sale is a continuation of REL’s strategy to consolidate and focus on its core businesses.”

Brothers Malvinder Singh and Shivinder Singh together own a 50.93% stake in Religare Enterprises. It also has International Finance Corporation – the private investment arm of the World Bank Group – and US-based Customers Bancorp Inc as its institutional shareholders.

Religare, the holding company of the group, offers a range of financial services, including loans to small and medium enterpirses, affordable housing finance, health insurance and wealth management, through its subsidiaries and operating entities.

As a group, it caters to retail investors, high-net-worth individuals, mid-sized corporates, SMEs as well as large corporates and institutions. It has 7,000 employees with a presence across 1,450 locations in India.

The Singh brothers – who had previously sold their flagship pharma firm Ranbaxy – have divested a string of assets in the financial services business over the past two years, including life insurance unit Religare Aegon, venture capital arm Northgate Capital, private equity fund house Landmark Partners, education-related real estate private equity arm Cerestra Advisors Ltd and private debt platform Religare Credit Advisors LLP, which was acquired by Baring Private Equity Asia last year.

In February, it had struck a deal to sell its wealth management arm to Anand Rathi Wealth Management.

As first reported by VCCircle, the firm is also in talks to sell its lending business as well as its broking outfit.

The group is looking to exit its financial service businesses in a marked U-turn from its previously announced plan to split the company into three separate listed firms involved in broking, lending and health insurance.

Separately, the Singh brothers are also looking for investors in their hospital business under Fortis Healthcare.

They are embroiled in a legal tussle with Japan’s Daiichi Sankyo over the previous transaction involving Ranbaxy.

True North

True North has $2 billion assets under management. It provides growth-stage capital to companies operating in India. It has made investments in consumer-focused industries like media and entertainment, radio taxi, retailing, food services and financial services besides healthcare.

Over the last 17 years, the home-grown firm has invested $1 billion in more than 30 Indian businesses. Its team has nine investment and 16 business managers.

On 28 February, it had announced its plans to back Mumbai-based Home First Finance Company India Pvt Ltd for about $100 million (Rs 667 crore), which was almost twice of what the housing company was looking to raise. Previously, True North and Baring PE Asia had jointly bid for ICICI Home Finance. However, the deal failed to fructify.

The PE firm, which was rebranded to True North early this year, has restructured its business and investment management teams as per sector specialisations – financial services, consumer, healthcare and technology products & services.

Leave Your Comment(s)