New Delhi: ReligareNSE 4.97 % Enterprises has agreed to sell its entire stake in NBFC arm ReligareFinvest to asset management company TCG Advisory Services for Rs 330 crore, the financial services company has said in a stock exchange filing.
The companies signed a share purchase agreement on Tuesday, it said. The parties had signed a binding term sheet on July 10.
“The consideration will be utilised to repay the outstanding loans to group companies, third parties and for third parties and for other general corporate purpose,” the company said.
Religare Enterprises also said it has settled its dispute with Axis BankNSE -2.50 %, which was restraining its capital raising plans.
“The divestment of our NBFC business will help conserve capital for the company and allow us to focus on other businesses of the group,” said Nitin Agarwal, group CFO at Religare Enterprises. “It’s a win-win deal for REL and TCG, who can help grow the NBFC business with a longterm capital commitment.”
ReligareFinvest chief executive Sanjay D Palve said with TCG coming in as a promoter shareholder, the non-banking finance company will have a strong backing of capital. “Our lenders are also positive to complete the restructuring of debt to ensure sustainable growth of company and their interest,” he said.
Religare had been in the news for all the wrong reasons in recent years. In February 2018, boards of both Religare Enterprises and ReligareFinvest were reconstituted after their promoters Malvinder and Shivinder Singh exited the firms.
The new ReligareFinvest board had alleged that Rs 740 crore were siphoned off from the company and misappropriated through loans to entities controlled by, connected to or known to the Singh brothers and their associates.
The original promoters’ stake in Religare Enterprises has reduced to around 1% and the company has applied for declassifying them as promoters. It is now majority-owned by a set of institutional investors and family offices, governed by an independent board, and a new management is trying to turnaround the fortunes of the group.
On December 17 last year, the company filed a complaint with the corporate affairs ministry and the Securities and Exchange Board of India (Sebi) against the Singh brothers, and former chairman and managing director Sunil Godhwani, seeking an investigation into suspicious transactions in Religare Enterprises and its subsidiaries.
Subsequently, Sebi on March 14, asked Religare Enterprises and ReligareFinvest to recall loans of Rs 2,315 crore given to Singh brothers’ other entities. ReligareFinvest has been under RBI’s prompt corrective action (PCA) plan, restraining it from further lending activity.
It is currently in advanced stages of restructuring its debt and improving capital ratios to come out of PCA restrictions.
It has ensured recovery from large borrowers and has entered into strategic tie-ups with banks for sourcing deals for them. “We are very confident that the revival of ReligareFinvest will set an example in the NBFC sector,” Palve said.
“Religare’s turnaround could provide much needed ray of hope to financial services sector in a time when every day negative news flows,” he said.