Religare Enterprises Ltd (REL) on Friday said that it has entered into a binding agreement with Kedaara Group entity Trishikhar Ventures LLP, a private equity firm, for investments in its health insurance subsidiary, Religare Health Insurance Company Ltd (RHICL). REL currently holds 88.951 per cent equity share capital in RHICL.

The total deal value is pegged at ₹400 crore, of which ₹200 crore would be for the stake-sale by REL, while another ₹200 crore would be brought in as primary equity capital by Kedaara. The investor will also have the option of investing another ₹100 crore. Post completion of this transaction, REL will hold 76.18 per cent stake in RHICL.

This deal will support the growth of the health insurance business and will enable REL to become debt-free after completion of this transaction and the divestment of its lending business to the TCG Group. This will, in turn, help the company to emerge as a strong financial services entity.

Rashmi Saluja, Non-Executive Chairperson of Religare Enterprises, said in a statement: “We are glad to partner with Kedaara for this transaction. REL has been going through difficult times in the recent past and the new management has been taking important steps not only to strengthen corporate governance practices and compliances, but also to capitalise the businesses for future growth.

“We are confident that this transaction will strengthen our position in the financial services business and will help us to achieve our aim of becoming a debt-free company by June 2020. Our health insurance business is well capitalised to grow its market share and is poised to achieve a market leader position soon,” Saluja said.

Will help ‘raising investment’

Anuj Gulati, MD & CEO, Religare Health Insurance, said: “This transaction will enable us to increase our investment in technology, distribution and service capability. We remain committed to building an institution that will be relevant beyond a 100 years.”

Since RHICL is an IRDAI-regulated entity, the transaction will be subject to IRDAI approval and other regulatory and statutory approvals as applicable and fulfilment of other conditions precedent. The transaction is expected to be completed within financial year 2020-21.