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Diversified financial services major Religare Enterprises (REL) has decided to simplify its corporate structure and pursue a reorganisation plan that would unlock value for all stakeholders.
The reorganisation plan would involve REL dropping its holding company model and creation of three distinct operating listed entities in the areas of lending, housing finance and capital markets.
Nil equity linkageCurrently, REL as a non-operative holding company, holds controlling stakes in three subsidiaries — Religare Finvest (SME-focused lending activity), Religare Health Insurance (health insurance) and Religare Securities (capital markets).
The current thinking is that Religare Finvest may get merged into REL and both Religare Health Insurance and Religare Securities would get disentangled into separate listed operating companies without any equity linkage with REL.
“Post the reorganisation, there will be three separate operating companies and all would be listed,” Sunil Godhwani, Chairman and Managing Director, REL, told BusinessLine after the firm’s board meeting on Friday.
“We grew to this level under the holding company model. For the next level of growth we need to rechristen ourselves and get out of the shadow of holding company to simplify the structure, unlock value and more importantly, be able to attract right growth capital for the next phase,” Godhwani added.
9-12 month timelineAsked about the timeline for completion of the proposed reorganisation plan, Godhwani said it may take 9-12 months for REL to transform itself into three separate listed operating companies.
The board of REL, which undertook a strategic review of its businesses at its meeting today, has given in-principle approval to the reorganisation proposal.
A Management Committee — to be chaired by Sunil Godhwani — has been constituted to examine and evaluate all relevant aspects of the plan, including a proposed reorganisation of the existing operating businesses (lending, health insurance and capital markets) of REL into three separate listed entities.
The proposed reorganisation plan is subject to further review and approval by the REL board and subsequent approval by the shareholders, relevant regulatory and judicial authorities.
Religare had recently exited its asset management business and decided to focus on its core business.
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