A preferential share issue will enable REL to issue new shares to Care Health shareholders at a negotiated price
Religare Enterprises (REL) plans to put its unlisted insurance arm, Care Health Insurance, on the books through a reverse merger through a preferential share issue, people familiar with the matter said.
The proposal, approved by the board of directors, would see REL issue shares to Care Health shareholders in exchange for their equity, effectively converting Care’s value into REL without the disclosure and regulatory burdens of a new initial public offering (IPO).
“REL is looking at a share swap route rather than a direct listing. The board resolution has been passed and this allocation plan should happen soon, possibly next quarter,” said a person aware of the discussions.
REL did not respond to a request for comment.
Care Health is widely seen as the key value driver in REL’s business mix – with its nominal market capitalization expected to exceed ₹15,000 crore. REL’s valuation is over ₹8,000 crore.
Another source said that “the aim is to capitalize on Care’s valuation in REL with less public scrutiny. This would result in REL being swallowed up as Care’s valuation is higher than its parent.”
A reverse merger refers to a corporate restructuring in which a private or privately held company (Care Health) becomes part of a publicly traded entity (REL) by merging into it, often by exchanging shares, so that the value of the privately held company is absorbed into the publicly traded company.
Share exchange
A preferential share offering will enable REL to issue new shares to Care Health shareholders at a negotiated price, without subjecting the arm to a separate public listing process – which involves extensive disclosures, market research, underwriting, regulatory approvals and investor scrutiny.
This path is considered faster and less disruptive and gives management more control over valuation terms. However, governance experts warn that this could reduce transparency, limit price development and disadvantage minority shareholders if valuations or exchange ratios are unfair.
Care Health, formerly Religare Health Insurance, has been consistently mentioned as a likely IPO candidate, but those plans have not moved forward amid leadership changes and pending regulatory issues. According to the latest share pattern, Religare holds 62 percent stake in Care Health, while Kedaara Capital holds about 15 percent stake.
Control battle
The parent company has been embroiled in a protracted control battle, as well as managerial and regulatory scrutiny over previous employee stock ownership plan (ESOP) issues.
In February, the Burman family of fast-growing consumer goods company Dabur formally took control of REL after a two-year battle with management led by Rashmi Saluja. However, the promoters managed to acquire a 26 percent stake in REL through an open offer and oust Saluja from the board.
Since then, Burmese have pushed for structural and governance changes, and this proposed transaction could be a strategic lever in their agenda.
Published on October 13, 2025
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