Religare Enterprises Limited (REL) is all set to sell its health insurance arm, Religare Health Insurance (RHI) Co. Ltd., valuing it at Rs.1,300 crore. True North, a private equity fund will acquire 80 per cent of Religare Health Insurance for a sum of Rs.1,040 crore.
The deal will enable Religare to focus on its financial services, with Malvinder and Shivinder Singh, the promoters of Religare keen to divest stakes.
Faering Capital, a private equity firm led by Sameer Shroff and Aditya Parekh, and Gaurav Dalmia, Founder of Landmark Holdings are the other stakeholders involved in the deal.
Established in 2012, Religare Health Insurance has grown to become a leading name in the Indian healthcare insurance sector. It has over 56 offices and an employee strength of 2,200, having earned premiums worth Rs.503 crore till March 31, 2016.
Other stakeholders in RHI include Union Bank of India and Corporation Bank, both of whom own 5 per cent stake. The management of RHI has a 10 per cent stake in it.
Warburg Pincus, an American private equity firm had also exhibited interest in the deal. True North, however, managed to land it on account of its Indian roots. Overseas entities can own only 49 per cent stake as per current norms.
The deal will be complete after all regulatory approvals are met.
REL has long-term borrowings to the tune of Rs.12,000 crore, with the company keen to repay existing debt. It is also being speculated that the company could sell its securities business to raise money.
Established in 1999 as India Value Fund and renamed True North in 2004, the company has shown interest in the Indian healthcare industry. It recently paid $200 million to pick up 40 per cent stake in Kerala Institute of Medical Sciences.