Religare to sell stake in arm RHICL to Kedaara for Rs 200 cr

"The company has entered into definitive agreements (share subscription and share purchase agreement and shareholders agreement)...with Kedaara Capital Fund II LLP and Trishikhar Ventures LLP (jointly referred as Kedaara ) for sale of part of the investment in Ltd (RHICL), a subsidiary company for a consideration aggregating to Rs 200 crore," Religare Enterprises Ltd (REL) said in a BSE filing.

It also said that with a primary capital infusion of Rs 200 crore in RHICL by Kedaara pursuant to the transaction, the company "would have divested part of its investment constituting 6.761 per cent of RHICL . The statement said the total deal value is pegged at Rs 400 crore, of which Rs 200 crore would be for the stake sale, while another Rs 200 crore would be brought in as primary equity capital by Kedaara.

The investor will also have the option of investing another Rs 100 crore. Post- consummation of this transaction, REL will hold 76.18 per cent stake in RHICL.

This deal will support the growth of the health insurance business and will enable REL to become debt-free after the completion of this transaction and the divestment of its lending business to the TCG Group. This will, in turn, help the company emerge as a strong financial services company, it said.

Religare Enterprises Non-Executive Chairperson Rashmi Saluja said: "We are glad to partner with Kedaara for this transaction. REL has been going through difficult times in the recent past and the new management has been taking important steps to not only strengthen corporate governance practices and compliances, but also capitalise the businesses for future growth.

We are confident that this transaction will strengthen our position in the financial services business and will help us to achieve our aim of becoming a debt-free company by June 2020. Our health insurance business is well capitalised to grow its market share and is poised to achieve a market leader position soon."

Commenting on the transaction, Religare Health Insurance CEO Anuj Gulati said : "This transaction will enable us to increase our investment in technology, distribution and service capability. I would like to convey my sincerest appreciation to our current shareholders, board of directors, customers, distribution partners and employees for reposing their faith in us over the years."

Since RHICL is a regulated entity, the transaction will be subject to insurance regulator IRDAI's approval and other regulatory and statutory approvals. The transaction is expected to be completed within fiscal 2020-21.

The Religare Enterprises stock closed on Friday at Rs 44.10 a share, down 85 paise, or  by 1.89 per cent, on its previous close on the BSE.