Religare Enterprises to raise $142 mn from Bay Capital, others

By TEAM VCC

  • 19 Feb 2018
Credit: Thinkstock

Religare Enterprise Ltd said on Monday its board has approved a plan to raise Rs 916.42 crore ($142 million) by issuing preferential warrants to investors including Bay Capital Investments Ltd.

The financial services company will issue up to 17.56 crore warrants at Rs 52.20 apiece, it said in a stock-exchange filing. These warrants can be converted into an equal number of equity shares within 18 months, it added.

Shares of Religare jumped 4.9% on Monday to Rs 63.15 apiece on the BSE where the benchmark Sensex fell 0.7%.

The announcement comes after the company said last week it would raise as much as Rs 1,200 crore via equity and debt to bolster its capital and invest in subsidiaries.

On Monday, Religare said the allotment of these warrants will be subject to approvals from the company’s shareholders. The company will issue the warrants to 41 investors, including private investment firm Bay Capital. However, it didn’t give a break-up of the amount it will raise from each investor.

Bay Capital is the single-largest non-promoter shareholder in Religare. Last month, VCCircle reported that the investment firm had increased its stake in the financial services firm controlled by brothers Malvinder and Shivinder Singh to nearly 10%.

Bay Capital was founded by Siddharth Mehta and Puneet Saraogi and runs a private equity and long-only public markets investment practice, according to its website. Its present and past portfolio companies include Sterling Holiday Resorts, Vini Cosmetics, IL&FS Energy, Intellivate Capital Ventures and the South and West India franchisee for McDonald’s Westlife Leisure Resorts, according to VCCEdge, the data research platform of VCCircle. It recently exited Vini Cosmetics with multi-bagger returns.

Religare’s fundraising comes at a time when the company is going through tough times. The company has sold several businesses over the past couple of years, including its entire alternative investment and wealth management practice as well as its stake in life insurance and asset management joint ventures and shut down its investment banking unit. It has also struck a deal to sell its health insurance arm to a consortium of PE investors.

Late last year, a hedge fund managed by Bay Capital had moved the National Company Law Tribunal seeking ouster of Religare’s board on grounds of mismanagement and oppression of minority shareholders.

Just last week, the Singh brothers resigned from Religare as well as hospital chain Fortis Healthcare Ltd after the Delhi High Court upheld a plea by Japan’s Daiichi Sankyo Co. Ltd against the brothers. The court last month dismissed the brothers’ objections to a Singapore arbitration panel’s ruling that had asked them to pay Rs 3,513 crore ($550 million) to the Japanese drugmaker.

Also last week, Religare appointed Bay Capital's Mehta to its board. It also named former Reserve Bank of India executive director P Vijaya Bhaskar and former Bank of America executive Vikram Talwar to its board. Besides, it named independent director Ashok Mehta as its interim CEO.