Religare Enterprises to enter ARC business, float QIP in early FY24

Delhi-based group expects to resume lending by Religare Finvest Ltd, a wholly-owned subsidiary

Religare Enterprises Ltd (REL) plans entering the asset reconstruction business and make a qualified institutional placement (QIP) to raise Rs 600-700 crore for new businesses, said its leader on Thursday.

The Delhi-based financial services group expects to resume lending by Religare Finvest Ltd (RFL), a wholly-owned subsidiary, after paying the last tranche of Rs 400 crore to lenders under a one time settlement (OTS) agreement signed in December 2022. RFL’s estimated time for coming out of the corrective action plan (CAP) is about a month after which the non-banking financial company would lend to the MSME segment.  

REL stock closed 2.4 per cent higher at Rs 158 per share.

Rashmi Saluja, executive chairperson of REL, said the company has enough resources to support existing businesses but new ventures need capital. “We are seriously contemplating to initiate a Qualified Institutional Placement (QIP) or preference shares in two-three months at REL level”.

Existing investors supported the company when it was not doing so well. So the primary approach will be to keep existing shareholders' interest in mind and see how much they will like to participate in the offering. The company was open to rope in strategic investors which could add strength, said Saluja.

REL’s key shareholders include International Finance Corporation (IFC), the World Bank group’s private investment arm (3.96 per stake), and Motilal Oswal Long Term Equity Fund (3.31 per cent holding). Foreign portfolio investors held 18.79 per cent stake as of December 2022, according to BSE filings.

Besides insurance, broking and web aggregation, Religare intends to float an alternate investment fund and do wealth management business, said Saluja.

About the rationale for entering the asset reconstruction business, she said the group has strength as it has recovered money and returned about Rs 9,000 crore to lenders. The management is confident to start and manage this business.

As for supporting RFL, Saluja said it has enough money garnered through recoveries to sustain business. Its current pool of stressed loans is around Rs 1,000 crore and is looking for recoveries of Rs 50-70 crore per month.

With RFL OTS, the management has been able to conclude the legacy issues faced by Religare Group on account of fraudulent activities of erstwhile promoters. REL stock on Thursday closed 2.4 per cent higher at Rs 158 per share.