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
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.