Religare Enterprises, the financial services conglomerate of billionaire brothers Malvinder Mohan Singh and Shivinder Mohan Singh, is set for a three-way split as part of a restructuring that will enable the listing of first health insurance company on Indian bourses.
Under the proposed reorganisation approved by the company board, its operating businesses of lending, health insurance and capital markets will be split into three separate listed entities, Religare Enterprises Ltd (REL) said in a statement on Friday.
The board has constituted a management committee under its chairman and managing director Sunil Godhwani to examine and evaluate all relevant aspects of the proposed three-way split, it said.
"It is very important to create the right enabling framework that would not only simplify our corporate structure but also help in unlocking and maximising value for all stakeholders," Godhwani said in a statement.
The decision to split REL comes within a day of similar proposal by the Singh brothers' Fortis Healthcare Ltd to vertically demerge its diagnostic business SRL Diagnostics and list it on the bourses.
Experts said the move will help unlock shareholders' value. Pavan Kumar Vijay, founder of legal and financial advisory firm Corporate Professionals, said the restructuring will help accelerate growth of individual businesses and attract "investors who are interested in investing in a business unit of a company, but not in the multiple asset of the company". Last year, the Singh brothers had tried to sell a majority stake in Religare.
But most of the potential suitors, including global and domestic private equity players like Apollo and Baring Asia, were not keen to buy the entire diversified portfolio and instead wanted to cherry pick verticals or businesses. The process did not eventually go through. In April, Religare sold its global alternative investment management businesses Northgate Capital and Landmark Partners to their existing management teams.
Religare Enterprises reported consolidated net profit of Rs 225.4 crore (before exceptional items) on a revenues of Rs 4,502.6 crore in the year ended March 2016.
Following the completion of the restructuring of Fortis Healthcare and Religare, the Singh brothers will have five listed companies. Currently, Religare Enterprises is the non-operative holding company for its various underlying operating businesses and is listed on Indian bourses.
The lending business operated through its subsidiary Religare Finvest Ltd (RFL) has a total book size of Rs 16,310 crore. RFL also houses an affordable housing finance business under Religare Housing Finance Development Corporation Ltd which has a loan book size of Rs 820 crore. Religare Health Insurance is a standalone health insurance business catering to both individuals and institutions. Besides Religare, the other shareholders in the business are Union Bank of India and Corporation Bank.