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New Delhi: Financial services player Religare Enterprises Ltd (REL) on Tuesday said it proposes to raise Rs 570 crore via preferential issuance of shares to a clutch of investors, including existing shareholders, to fund its business plans.
The company would issue 5.41 crore shares at price of Rs 105.25 per unit to existing shareholders like Burman family (Dabur Group), Ares SSG Capital and selected new marquee investors, Religare Enterprises said in a statement after its board meeting.
The fund raised would be primary utilised as growth capital for investment in its subsidiary’s businesses, it added. REL is the holding company for four key businesses — SME finance via Religare Finvest Limited (RFL); health insurance via Care Health Insurance Limited (CHIL); retail broking via Religare Broking Limited (RBL); and affordable housing via Religare Housing Development Finance Corporation Limited (RHDFCL).
A part of the fund would be utlised for the proposed debt recast RFL, which is under corrective action plan of the Reserve Bank of India (RBI) since January 2018 due to its weak financial health.
The company has been in financial distress due to alleged misappropriation of funds by erstwhile promoters Shivinder Singh and his brother Malvinder Singh. Multiple investigative agencies are probing the case of financial bungling of about Rs 4,000 crore.
Commenting on the board decision, REL Chairperson Rashmi Saluja said “the current fund raise is a testimonial of recognition of future growth potential of all our businesses, by our key shareholders and new investors.” “We would invest these funds towards growth of all our underlying businesses including Religare Finvest Ltd (RFL) which is undergoing the process of Debt Restructuring and I am positive about the future of that company,” Saluja added. The health insurance and other businesses are also looking up, she said.