Mumbai-based U GRO Capital, founded by industry veteran Shachindra Nath, is likely to buy Religare Finvest and Religare Housing Development Finance for about Rs 400 crore, industry sources told ET.
U GRO Capital has signed a binding term-sheet and the deal is likely to be sent to the Reserve Bank of India (RBI) for its approval, said people aware of the development.
Earlier this year, RBI rejected a proposal by TCG Capital to acquire Religare Enterprises’ businesses and told the company to find another suitor.
The sale was a part of the company’s debt resolution process. Religare Enterprises was originally promoted by Malvinder and Shivinder Singh who subsequently lost control of the firm. Several banks which were lenders to Religare had said the deal would be concluded before the end of the current fiscal.
Shares of Religare Enterprises, which rallied 40% in the past one month, gained 9% on Monday to close at Rs 71.50. Sources said that the deal is subject approval from lenders and regulators. Religare did not respond to a mailed query from ET. U GRO denied any such development. “The information is incorrect. We have not signed a binding agreement with Religare Finvest,” said company spokesperson.
Other bidders expressing their interest include global and domestic investors such as US PE firm Lone Star, India Resurgence Fund (India RF), which is a joint venture between Piramal Enterprises and global private equity player Bain Capital, according to sources.
Nath, who quit as group chief executive officer at Religare in 2016, founded U GRO after acquiring a listed NBFC and providing business loans.
Currently, RFL’s total loan book is Rs 5,300 crore as on March 31, 2020 and SME book constituted 52% of total book or Rs 2,775 crore. After RBI’s rejection of TCG group’s proposal to acquire RFL, in April 2020 RFL submitted a revised Debt Resolution Plan (DRP) to its lenders for restructuring of its current debt of Rs 4,600 crore.
Religare’s NBFC arm has been facing headwinds after allegations of siphoning off funds by the erstwhile promoters, the Singh brothers. The alleged misappropriations of funds by erstwhile promoters and their associates resulted in RBI placing RFL under Corrective Action Plan in January 2018.
Source: Economic Times