Singapore based First Degree to buy Essel para banks

MUMBAI: Singapore-based First Degree Global Asset Management is said to have signed a binding agreement to buy two financial services firms owned by Essel Group promoter Subhash Chandra, two people with direct knowledge of the deal told ET.

The asset manager is likely to buy 100 percent equity in Essel Finance Business Loans Ltd and Essel Finance Home Loans Ltd. The deals are likely valued at Rs 150 crore.

A letter of intent has been signed between the buyer and the sellers, one of the persons cited above told ET.

First Degree did not reply to ET’s queries.

An Essel spokesperson for financial services companies confirmed the matter, saying that Essel Finance Business Loans has applied to the Reserve Bank of India (RBI) for change in shareholding.

It will soon apply to the National Housing Bank for the housing company.

First Degree would be retaining the existing management in both companies.

Essel Finance Business Loans has a loan book size of Rs 350 crore versus borrowings of Rs 260 crore. The housing finance company has a Rs 41-crore loan book.

These companies have drawn credit lines from lenders such as Catholic Syrian, AU Small Finance, RBL and larger non-banking finance companies. Individual banks could not be contacted immediately for comments.

First Degree Global Asset Management Pte is registered under the Monetary Authority of Singapore.

On July 4, ET reported that US cable major Comcast, which owns NBC Universal, and Atairos, a $4-billion investment company led by former Comcast CFO Michael Angelakis, was looking to team up with PE fund Blackstone and James Murdoch’s family office Lupa Systems to bid for Zee Entertainment Enterprises.

At least 11 mutual funds — HDFC, Aditya Birla Sun Life and ICICI Prudential among them — have an exposure of about Rs 6,600 crore to the Essel Group’s debt securities.

In April, Group chairman Chandra said he was confident of meeting the September 30 repayment deadline.

The deal will give a breather to Chandra, whose Essel Group is facing a severe debt crisis. Chandra had, last year, announced plans to sell half of the promoters’ then 41% stake in the company.

It has been trying to sell businesses and assets across various verticals — power transmission, roads, renewables — to reduce group leverage of Rs 13,000 crore. The promoters had recently struck a deal for three of their 12 road projects with Canada’s CDPQ that will help raise funds worth Rs 3,500 crore. The Group has also been in discussions with the Adani Group for its solar parks and with Bharti for merging their DTH businesses.

Last November, Zee announced that its promoters, led by Chandra, plan to sell up to 50% stake to a strategic partner in order to deleverage their balance sheet. Subsequently, the management has indicated it is open to selling over 50% of holdings in the firm as part of the asset monetisation efforts.