May 11, 2009
Is Religare expanding too fast too soon?
Religare Enterprises, the financial services firm owned by the Delhi based Singh family has bid for AIG Investments, the fund management arm of US troubled insurance giant, American International Group (AIG), reports The Times of India.
AIG Investments manages nearly $100 billion of assets from over 45 locations globally. It manages money in equities, fixed income, private equity, multi-strategy hedge funds and real estate funds. The report adds that the Delhi-based company which is currently leading the race for fund management unit among eight others could pay around $600-700 million. Religare has been talking to AIG Investments top management, led by Win Neuger, for nearly two months and is at an advanced stage of negotiations, adds the report.
AIG Investments has proven to be a non-core asset of the troubled insurance giant, AIG after it had to take $185 billion in government bailout money, effectively nationalizing it. As part of its restructuring exercise, the company is shedding the businesses which are non core to its foreign general insurance operations and its foreign life insurance unit. It has also put AIG Investment’s East Africa unit for sale, says a report.
AIG Investments runs a total of $676 billion in assets. But about $565 billion is linked to AIG’s insurance business. The company plans to sell, as a stand-alone business, the part of AIG Investments that runs the remaining $111 billion for outside clients.
Another contender in race for acquiring the business is Australia’s investment banking major, Macquarie Group. Interestingly, both Macquarie and Religare have a joint venture for wealth management in India. Macquarie Group stands a strong contender, having raised A$1.2 billion in fresh equity recently and carrying A$4.3 billion in surplus capital on its balance sheet.
Religare’s Acquistions
After selling its stake in the pharma company for Rs 1000 crore, the Singh family flush with funds is all but expanding its financial services portfolio through acquisitions and alliances.
The latest for the company is its intention of acquiring AIG Investment Management business, which it plans to fund through its internal accruals as well as fresh debt. Religare has also announced a rights offer at Rs 355 per share, to raise nearly Rs 1,850 crore. The entire offer is underwritten by the Singh family, sitting on cash.
It recently got into a JV with Milestone Capital to manage a Rs 600 crore healthcare and education fund. It recently bought 24% more into its private equity joint venture Vistaar Religare capital advisors- a Rs 200 crore fund that invests in films.
Moving from private wealth management to asset management, the company’s asset management arm, Religare Aegon recently acquired acquired Lotus India Asset Management company at an estimated Rs 100 crore.
Coming to public equities, Religare Capital Markets, the wholly owned subsidiary of Religare Enterprises Ltd (REL) acquired 97.76 per cent stake in Hichens Harrison & Co Plc following the acceptance of its open cash offer by the UK firm.
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