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10 Apr 2017

Home-grown PE fund acquires ailing Religare Health Insurance

NPA-ridden insurance business acquired by Indian PE fund.

A consortium of investors, led by Indian private equity fund True North, finally acquired the ailing health insurance business of Religare Enterprises Ltd for Rs. 1,300 crore.

According to the statement released by both the firms, this deal "marks the single largest investment in a standalone health insurance company in India".

Here's a look at how this transaction went down.

In context

NPA-ridden insurance business acquired by Indian PE fund.
Selling one in order to save the other

Making choices

Selling one in order to save the other

Religare Enterprises owned Religare Finvest Limited (RFL) has been facing trouble since quite a long period due to non-performing assets.

The parent company, therefore, finally decided to sell off its health insurance arm of the business i.e., Religare Health Insurance which was dedicated towards distribution and servicing of health insurance products, so that, it can inject fresh capital into their non-banking finance arm RFL.

Home advantage

Outbidding foreign PE firms to secure deal

During the deal negotiations True North, previously known as India Value Fund Advisors (IVFA), had outbid Warburg Pincus, a foreign PE firm, in lieu of its home-grown advantage against Warburg Pincus' FDI sector cap restriction in India.

J.P. Morgan acted as the exclusive financial adviser to Religare Enterprises throughout the deal.

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True North, the home grown private equity firm

Sneak peak

True North, the home grown private equity firm

The firm's vested interest encompasses financial services, consumer, healthcare and technology products & services.

The PE fund had recently exited Manipal Health and got acquired by Temasek for $125 million.

The firm claims that it has worked with over 30 businesses and made investments amounting to Rs. 8,000 crore in total prior to this deal.


True North invests Rs. 1,298 crore in KIMS

True North made one of the biggest PE Indian hospital chain investments of recent times by agreeing to shell out Rs. 1,298 crore to Kerala Institute of Medical Sciences (KIMS).

It has also agreed to fund the KIMS expansion plans with the initial capital infusion, to become one of the largest health care providers in India and the Middle East.

Private equity investments up by 36%

Marked growth

Private equity investments up by 36%

According to Venture Intelligence, private equity investments in the January-March period of this year grew 36% and saw transactions worth $5.44 billion in 117 deals in India.

This makes a significant increase from last year when during the same period $4 billion worth of investments took place through 198 deals.

It is to be noted that these figures excluded private equity investments in real-estate.

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