Religare to sell stake in NBFC arm for Rs 500 cr

France's Societe Generale, US-based Goldman Sachs, Blue River Capital and a couple of other private equity (PE) funds are in talks with Religare Enterprises to buy a stake in Religare Finvest, the wholly-owned non banking financial company (NBFC) arm of the Delhi-based brokerage and investment banking firm. Religare was likely to divest a minority stake in the NBFC arm to raise Rs 500 crore, according to sources.

Religare Enterprises has had an amazing run on the bourses. Its shares are trading at around Rs 700 apiece compared with the issue price of Rs 185. Through its IPO, in November, the company raised Rs 160 crore by selling a 15 per cent stake to the public.

When contacted, Sunil Godhwani, CEO, Religare Enterprises said, "Religare is being built as a large financial services institution and we would continue exploring opportunities for bringing capital and institutional investors of pedigree in all the businesses. However, at this point of time, there is no firm commitment with any one."

Sources close to the deal say the transaction is expected to finalised very quickly.

Religare Finvest provides margin funding, loan against shares and personal loans to customers and also distributes a large number of third party products to the retail clients. It is expected to broaden its suite of products and offer a wider range.

Religare Enterprises, a Ranbaxy-promoted company, is aggressively tapping the NBFC space and may even make a foray into the lucrative credit card, loan against property and other consumer lending space. This, however, could not be confirmed from the company.

The parent company had earlier collected 62 crore through a pre-IPO placement with global investment bank Merrill Lynch.

The NBFC space is witnessing a lot of traction, with many investors looking to gain exposure in this space. Industry officials expect the sector to grow at 30-40 per cent over the next few years.

The space has already seen some big ticket PE deals, including the recent India Infoline deal where Singapore-based Orient Global invested Rs 750 crore in its insurance business and other subsidiaries.

The US-based global PE major AIG entered the arena through two acquisitions early last year.

Goldman Sachs is also learnt to be eyeing an entry in this area and has applied for an approval from the foreign investment promotion board. The NBFC space, unlike the banking sector, does not have any restrictions on branch expansion.