Edelweiss Financial Services Ltd said on Friday its acquisition of Religare Enterprises Ltd's securities business fell through after Religare failed to get the necessary regulatory approvals.
Religare shares fell as much as 5 percent in early trading, but recouped most losses to trade down 1.5 percent at 0636 GMT. Edelweiss shares were trading flat.
Edelweiss Financial, the wealth management unit of Mumbai-based Edelweiss Group, said in December it would buy Religare's securities business for about 2.50 billion rupees ($38.5 million).
Religare, which has been selling its units to cut down its debt pile, said in January that a private equity firm would buy its health insurance business. It has more than $770 million of bonds and loans outstanding, according to Thomson Reuters Eikon data.
Religare was not immediately available for comment.
Religare is being probed by the country's fraud investigating agency SFIO about an alleged misconduct of its promoters Malvinder Singh and Shivinder Singh, the Times of India reported last month. The company has, however, said it had not received any formal communication about the investigation.
"I think the Religare group itself is in various kinds of trouble ... so because of allegations against promoters, they were not able to provide the necessary information within stipulated time," said Vishal Modi, deputy head of research at Maybank Kim Eng.
He added that things have deteriorated for Religare since the deal was announced and the fact that it was scuppered is a positive for Edelweiss.
Religare's securities business includes securities and commodities broking, and depository participant services.
"Due to the seller's inability to obtain the requisite clearances within the agreed timeline, the binding agreement has come to an end on March 15," Edelweiss said in a statement on Friday. More https://www.bseindia.com/xml-data/corpfiling/AttachLive/8ed0769d-0b36-42ab-b1ec-92ed4a5b0ea7.pdf