Ex-GE Cap Duo may Buy Ma­jor­ity in Reli­gare Fin

Pramod Bhasin and Anil Chawla along with fi­nan­cial in­vestors said to be in talks to ac­quire a big stake in the NBFC from Malvin­der and Shivin­der Singh On the Block

The Economic Times - - Brands & Companies -

Vinod Ma­hanta & Sachin Dave

Mum­bai: For­mer GE Cap­i­tal duo Pramod Bhasin and Anil Chawla are in talks to buy a ma­jor­ity stake in Reli­gare Fin­vest, a non-bank­ing fi­nance com­pany (NBFC) that fo­cusses on lend­ing to Small and Medium En­ter­prises (SMEs) from broth­ers Malvin­der and Shivin­der Singh, two per­sons with di­rect knowl­edge of the mat­ter told ET. “Bhasin and Chawla, along with fi­nan­cial in­vestors are plan­ning to in­fuse any­where be­tween $175-200 mil­lion (`12001400 crore) into Reli­gare Fin­vest,” a per­son with di­rect knowl­edge of the mat­ter said.

Reli­gare Fin­vest, is a fully owned (99.99%) sub­sidiary of the BSE listed Reli­gare En­ter­prises. The com­pany is look­ing to de­merge the NBFC arm be­fore the deal, the per­sons quoted above told ET.

Bhasin was the founder of Gen­pact and for­mer chief ex­ec­u­tive of GE Cap­i­tal In­dia and Asia while Anil Chawla was the for­mer head of GE Cap­i­tal’s Com­mer­cial busi­ness and DE Shaw In­dia. This would be a sec­ond ma­jor deal by the in­vestor duo in re­cent time. Bhasin and Chawla had last year taken over GE Cap­i­tal’s con­sumer busi­ness with the help of AION Cap­i­tal. The busi­ness has since been re­named Clix Cap­i­tal.

Peo­ple in the know say Bhasin and Chawla plan a com­bi­na­tion of strate­gic cap­i­tal, debt and some per­sonal in­vest­ment to make a vi­able pro­posal for Singh broth­ers, founders of Ran­baxy. While the strate­gic in­vestors could have a larger stake, Singh broth­ers may also hold on some eq­uity.

“They are try­ing to cre­ate a win-win sit­u­a­tion for ev­ery­one. The Fact Sheet

owned (99.99%) sub­sidiary of the BSE listed Reli­gare En­ter­prises

work­ing cap­i­tal and short term trade fi­nance for SMEs

net­work of 35 branches in In­dia

book size of

The whole idea is to scale up the busi­ness and cre­ate value for ev­ery­one,” says the source.

Reli­gare Fin­vest has a net­work of 35 branches in In­dia and would be look­ing to pro­vide debt cap­i­tal to power In­dian SME space. Reli­gare Fin­vest lends mort­gage, work­ing cap­i­tal and short term trade fi­nance for SMEs.

The NBFC also runs a re­tail cap­i­tal mar­kets fi­nanc­ing busi­ness which in­cludes loan against mar­ketable se­cu­ri­ties and with a book size of ₹ 18,000 crore. Reli­gare Fin­vest ac­counts for about 80 % of the bot­tom-line of Reli­gare En­ter­prises with a mar­ket cap­i­tal­i­sa­tion of about ₹ 4,200 crore. SME fi­nance seg­ment has seen healthy growth in the last few years and is set to see a spurt in the years to come.

“There have been three broad seg­ments where many NBFCs cur­rently op­er­ate in the SME lend­ing space mainly lend­ing to pro­mot­ers for share pur­chase, ac­qui­si­tion fi­nance or work­ing cap­i­tal and ex­pan­sion needs. First is at the higher spectrum of ₹ 70-75 lakh plus loans, lower seg­ment of ₹ 10 lakh and below and the mid seg­ment. The higher and the lo- wer spectrum have seen high growth and are likely to see that con­tinue, though NBFC’ have be­come cau­tious on this prod­uct,” said Bhavik Hathi, man­ag­ing direc­tor, Al­varez and Marsal.

Delhi High Court in Jan­uary al­lowed Singh broth­ers to sell stake in all the com­pa­nies they hold stake in­clud­ing Reli­gare Fin­vest. The High Court al­lowed them to sell stake in For­tis Health­care and Reli­gare Fin­vest. Ja­panese drug maker Dai­ichi Sankyo had ear­lier raised con­cerns such deal could pre­vent the com­pany from re­cov­er­ing about ₹ 2,500 crore as part of an ar­bi­tra­tion award from Singh broth­ers.

Singh broth­ers, who face the ar­bi­tra­tion penalty and have re­port­edly pledged much of their share­hold­ing in group com­pa­nies against loans. “We don’t wish to com­ment on such spec­u­la­tions. Our lend­ing busi­ness, Reli­gare Fin­vest is not up for sale,” Reli­gare Fin­vest said re­spond­ing to an ET mail seek­ing com­ments. Bhasin also re­fused to com­ment on the story while Chawla did not re­spond at all.

Bhasin and Chawla are set to out­bid other strate­gic and pri­vate eq­uity in­vestors in race for Reli­gare Fin­vest stake, peo­ple in the know said. ET had re­ported on Oc­to­ber 24 that Singh broth­ers had ap­proached fi­nan­cial and strate­gic in­vestors to sell Reli­gare Fin­vest for as much as ₹ 6,000 crore.

Feel­ers were re­port­edly also sent to Su­nil Kant Mun­jal, chair­man of Hero Cor­po­rate Ser­vices. Hero Fin­Corp had raised ₹ 1,000 crore from Chrys Cap­i­tal, Credit Suisse and Hero Group in Septem­ber. PE firms in­clud­ing Black­stone, Bar­ing Asia, TPG and Ever­stone were also ap­proached for the stake sale in Reli­gare Fin­vest.

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