Religare Enterprises Limited (“Religare”), a diversified financial services group of India, has acquired a controlling stake of 87.5% in Maharishi Housing Development Finance Corporation Limited (“MHDFC”) and will be infusing close to Rs. 93.09 Crores into MHDFC. The share purchase agreement was signed between the two on May 28, 2009.
On this announcement, Mr Sunil Godhwani, CEO & MD Religare said, “This development reinforces our commitment to our lending business. ‘Housing Finance’ business fits well with our over all plans and the ‘Lending Business Strategy’ of Religare. Available data shows a huge gap between the demand and supply in the Indian housing finance market, there is big potential for business growth as one tries to meet demand.”
Since 1993, MHDFC has been operational in the rural and Tier-III markets (source - http://nhb.org.in) and will complement well with Religare’s existing network across 498 cities and towns in India. MHDFC has a National Housing Bank (NHB) license, which would give Religare a ready platform for an operational roll out. We expect that Religare’s step into the housing finance business will in turn strengthen its position as a diversified financial services player and add to the existing growth and competition of the market.
Indian housing finance market
Today there is a huge demand and supply gap in the Indian housing finance market. According to the 10th five year plan, there is an estimated shortage of 22.4 million housing units in India. According to the European Mortgage Federation 2006 and Asian Development Bank 2007, the contribution of housing finance sector to the Indian economy is only 6% when compared to the other global scenario, with china 12%, Singapore 32%, Hong Kong 41% and US 80%. Therefore this is the right time for Religare to venture into the housing finance business and fill the missing space in its gamut of financial services.
In the current scenario, the government and the builders are focusing on generating affordable housing plans for its customers keeping in mind the increasing demand in housing finance at 25-30% CAGR (source-BSR, RBI and T&P, NHB reports). Therefore, venturing into this field will provide Religare an opportunity to contribute to the Indian economy and other linked industries like cement, steel etc and in addition contribute to employment generation.
More From This Section
In light of the above, we believe that we are tapping into a sector which has potential for growth in the Indian economy. Some key players in this sector are HDFC Ltd, ICICI Bank, LIC Housing Finance, Dewan Housing Finance, India Bulls, Tata Housing finance, IDBI Housing finance and other nationalized banks.
About Religare
Religare (NSE Code-RELIGARE, BSE Code-532915, Bloomberg Code-RELG IN) is a diversified financial services group of India offering a multitude of investment options. The diverse bouquet of financial services which Religare offers can be broadly clubbed across three key verticals - Retail, Institutional and Wealth spectrums. The services extend from asset management, life insurance, wealth management to equity broking, commodity broking, investment banking, lending services, private equity and venture capital. Religare has also ventured into the alternative investments sphere through its holistic arts initiative and film fund. With a view to expand, diversify and introduce offerings benchmarked against global best practices, Religare operates in the life insurance space under ‘Aegon Religare Life Insurance Company Limited’ and wealth management under the brand name ‘Religare Macquarie Private Wealth’.
Religare has a pan India presence, 1837 locations across 498 cities and towns. It also currently operates from nine international locations following its acquisition of London's brokerage & investment firm, Hichens, Harrison & Co. plc (now Religare Hichens, Harrison Plc).
The vision is to build Religare as a globally trusted brand in the financial services domain and present it as the 'Investment Gateway of India'. All employees of the group guided by an experienced and professional management team are committed to providing financial care, backed by the core values of diligence, innovation, ambition and passion.
For more information, please visit - www.religare.in
“Religare Enterprises Limited proposes, subject to receipt of requisite approvals, market conditions and other considerations, to make a rights issue of its equity shares to its existing shareholders and has filed a draft letter of offer (“DLOF”) with the Securities and Exchange Board of India (“SEBI”). The DLOF is available on the website of SEBI at www.sebi.gov.in as well as on the websites of the lead manager at www.enam.com. Investment in equity shares involves a high degree of risk and for details relating to the same, please refer to the section titled “Risk Factors” of the DLOF.”