Edelweiss Financial Services Ltd said on Friday its acquisition of Religare Enterprises Ltd's securities business fell through because Religare failed to get the necessary regulatory approvals.

Religare shares fell as much as 5 per cent in early trading, but quickly recouped most losses to trade down 1.3 per cent. Edelweiss shares rose 1 per cent. Religare, which has been selling its units over concerns of rising debt, said in January a private equity firm would buy its health insurance business.

The company is being probed by the country's fraud investigating agency SFIO regarding misconduct of its promoters Malvinder Singh and Shivinder Singh, according to a media report last month. The company has, however, said it has not received any formal communication about the investigation.

Edelweiss Financial, the wealth management unit of Mumbai-based Edelweiss Group, said in December it would buy the securities business for about $38.5 million to expand its position in the Indian asset and wealth management industry. “Due to the seller's inability to obtain the requisite clearances within the agreed timeline, the binding agreement has come to an end on March 15,” Edelweiss said in a statement on Friday.

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