Religare to sell finvest stake to Chatterjee Group

Religare Finvest is a non-banking financial company that focuses on lending to small and medium enterprises.

Religare to sell finvest stake to Chatterjee Group
Mumbai: Shares of Religare Enterprises hit their daily circuit limit of 10 per cent on Thursday, after the firm said it agreed to sell its entire stake in non-banking finance company Religare Finvest along with its housing finance unit to Kolkata-based Chatterjee Group.

Financial terms were not disclosed, but the deal is a major relief to the debt-laden company that has been roiled by alleged financial irregularities by former promoters Malvinder and Shivinder Singh.

Religare Finvest is a non-banking financial company that focuses on lending to small and medium enterprises. Under the deal, Chatterjee Group’s TCG Advisory Services will also buy Religare Finvest's stake in Religare Housing Development Finance Corp.


The deal will help Religare Enterprises improve its focus on its other businesses as well as in the implementation of an ongoing debt resolution process at Religare Finvest, Religare Enterprises said in a statement filed with stock exchanges late on Wednesday. It will also help provide support to future growth of the NBFC and the housing finance business, it said.

Shares of Religare closed at Rs 42.95 on the BSE, their highest level in nine months.

The Religare Group has been going through a tough time following allegation of mismanagement and misappropriation of funds against the erstwhile promoters.
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In April, Religare Finvest failed to pay an instalment of loan repayment and proposed a debt resolution plan to banks.

Religare Finvest had posted revenue of Rs 796 crore in fiscal 2019, when Religare Housing had registered about Rs 130 crore.

Sanjay Palve, the chief executive of Religare Finvest and managing director of the housing finance company, said they were confident of the transaction helping capitalise both companies “to achieve growth in the high potential SME and affordable housing sectors”. He said government impetus on the MSME and housing sectors, “reinforced by the recent budget announcements, will ensure robust long-term growth for both sectors”.

SBI Capital Markets acted as the adviser to the deal.
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The Religare Group had been exiting some of its businesses in the past few years. In 2017, a consortium of investors led by private equity firm True North acquired an 80 per cent stake in Religare Health Insurance Co. In the same year, it sold Religare Wealth Management to Anand Rathi Financial Services.

In February, the new management of Religare Finvest approached the National Company Law Tribunal, alleging diversion of funds by the Singh brothers. It had filed claims totalling Rs 1,900 crore against 19 companies that were linked to the former promoters.
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