Religare in acquisition mood - Northgate in the list next

Religare Enterprises is close to buying a majority stake in a venture capital and private equity investment firm co-founded by former
top-flight American sportsmen, company officials said, as part of its plan to grow into a global financial services provider through overseas acquisitions.

Religare, owned by the former promoters of Ranbaxy Laboratories Malvinder and Shivinder Singh, has signed a definitive pact to buy about a 65% stake in California-based Northgate Capital for some $200 million (about Rs 1,000 crore), persons familiar with the development said. The deal is expected to close by July. “The partnership will accelerate our process of seeking similar partnerships in other asset classes,” CEO & MD Sunil Godhwani wrote in a statement to ET. He declined to disclose the value of the deal.

Northgate, a fund of funds which manages around $3 billion in assets, is run by its five founders, three of whom played in the National Football League. Mark Harris, Brent Jones and Thomas Vardell, all of them now managing directors at Northgate, represented the San Francisco 49ers. Hosein Khajeh-Hosseiny and Jared Stone are the firm’s other founders. Northgate officials could not be reached for comment.

Religare Group COO Sachindra Nath said the financial services provider is buying Northgate through a US-based holding company and has plans for several more acquisitions.

“The holding company plans to buy 51-75% stake in several asset management companies globally. We plan to list the holding company when its assets under management touches $100 billion.”

Post acquisition, Northgate’s founders will continue to run its operations and own significant equity interests in it while having controlling interests in the general partner private equity and venture capital funds it has invested in.

Religare has outlined a plan to expand its operations overseas and plans to invest $1 billion (Rs 4,600 crore) for strategic investments globally.

Last week, the Delhi-based company closed a rights issue to raise over Rs 1,800 crore.

Recently, it narrowly lost out to Hong Kong-based billionaire Richard Li’s Pacific Century in an attempt to buy AIG’s asset management arm, which manages about $100 billion worth of client funds across the globe. Religare now plans to tap smaller, niche firms, Mr Nath added.

Northgate will be Religare Enterprises’ second global acquisition. In 2008, the company bought London-based stockbroking firm Hichens Harrison for $110 million.

Locally, in 2008, it acquired Lotus AMC, which managed over Rs 5,000 crore in mutual funds.

Last year, another family venture of the Singh brothers, hospital chain Fortis Healthcare, bought 10 hospitals from rival Wockhardt Hospitals.

The deal, which was pegged at around Rs 900 crore, was one of the largest transactions to be sealed in the domestic healthcare space. In 2008, the Singh brothers sold their 35% stake in drugmaker Ranbaxy to Japanese pharma company Daiichi Sankyo for Rs 10,000 crore.

Religare Enterprises’ financial services include asset management, life insurance, wealth management, equity and investment banking.

The Religare stock closed almost unchanged at Rs 367 on BSE on Monday