Malvinder and Shivinder Singh exit Religare Health Insurance

Malvinder and Shivinder Singh
Image: Amit Verma

Malvinder and Shivinder Singh-promoted Religare Enterprises Limited (REL) has entered into a definitive agreement with a group of investors led by True North - formerly known as India Value Fund - to sell its entire 80 percent stake in Religare Health Insurance Company Limited (RHI). State-owned Corporation Bank and Union Bank of India hold 5 percent stake each in RHI, while the remaining 10 percent is owned by the management in the form of employee stock options.

As per a statement issued by the company, the transaction values RHI at Rs 1,300 crore. Apart from True North, the other investors in the consortium are Gaurav Dalmia and Faering Capital, founded by HDFC chairman Deepak Parekh's son Aditya Parekh and his investment banker friend Sameer Shroff.

Vikram Nirula, Partner of True North said: “We have been closely evaluating the health insurance space and have been impressed by the quality of RHI’s management team and business.  We believe that RHI would be an excellent platform for building an enduring health insurance franchise in India.”

Maninder Singh, Group CEO, Religare Enterprises Ltd said: “We are confident that RHI will continue on its high growth trajectory under the new ownership. This sale is a continuation of REL’s strategy to consolidate and focus on its core businesses."

The transaction, which is subject to necessary regulatory approvals, marks the single largest investment in a standalone health insurance company in India. Since its launch in July 2012, RHI is one of the standalone health insurers in the country. It reported a Gross Written Premium (GWP) of Rs 503 crore for the year ended March 31, 2016.   

J.P. Morgan acted as the exclusive financial advisor to REL on this transaction.

The stake sale in RHI comes at a time when the Singh brothers have been reportedly looking to divest their stake in certain businesses to tide over a cash crunch at the group level. In January, they made headlines for apparently holding talks with a host of blue-chip private equity firms to sell a part of their holding in Fortis Healthcare Ltd. In February, Religare Wealth Management (RWM) was acquired by the Anand Rathi Group for an undisclosed amount.

Religare Enterprises Limited is the holding company for one of India’s leading diversified financial services groups. REL offers an integrated suite of financial services through its underlying subsidiaries and operating entities, including loans to SMEs, affordable housing finance, health insurance and capital markets. REL is listed on the Bombay Stock Exchange (BSE) and National Stock Exchange (NSE) in India.

True North was earlier known as India Value Fund Advisors. It was established in 1999 with a focus on investing in mid-sized profitable businesses across diverse sectors. It has launched five separate investment funds with a combined corpus of over $2 billion.