Capital markets regulator Securities and Change Board of India (SEBI) on Friday (February 14, 2025) rejected Digvijay Laxhamsinh Gaekwad’s plea searching for an exemption to make a competing open supply for a majority stake in Religare Enterprises.
With this ruling, the Burman Group’s open supply course of stays on observe, solidifying their acquisition bid for Religare Enterprises Ltd (REL).
The market regulator in an order acknowledged that the worth provided by Mr. Gaekwad was ₹275 per share within the proposed open supply which was ₹40 greater than the Burman Group’s supply of ₹235 per share.
“The applicant (Danny Gaekwad Developments & Investments, Florida) has failed to demonstrate his ability to meet the financial obligation for making the competing open offer,” it acknowledged.
SEBI additionally noticed that the “applicant has failed to deposit ₹600 crore, as directed by the Supreme Court of India vide its order dated February 7, 2025, read with order dated February 12, 2025, which would have shown the applicant’s commitment towards making the competing open offer”.
Within the absence of ample proof of economic sources required for making the competing open supply, the appliance doesn’t look like bonafide. It appears frivolous and aimed solely at hindering the open supply course of, the order handed by SEBI’s whole-time member Ashwani Bhatia mentioned.
“I …. dispose of the application dated February 1, 2025, filed by the applicant,” Ms. Bhatia mentioned within the order.
The regulator in its order, famous that Mr. Gaekwad’s request didn’t qualify as an exemption beneath the norms since he was not searching for reduction from making an open supply however reasonably permission to make a competing one in opposition to the Burman Group.
SEBI maintained that the Burman Group’s public announcement date remained September 25, 2023, as per guidelines, and never January 18, 2025, as contended by Mr. Gaekwad.
The regulator additionally emphasised that Mr. Gaekwad had not utilized for crucial regulatory approvals from SEBI, RBI, or different authorities. Even when he did, the approval course of can be time-consuming, resulting in uncertainty and additional delaying the open supply.
SEBI additionally questioned the position of Mr. Gaekwad’s service provider banker, PL Capital Markets Pvt. Ltd., in doing the due diligence whereas taking up the project of the competing open supply.
“The merchant banker was clueless about the credentials of Mr. Gaekwad and was found to have failed to do proper due diligence and KYC of his client before accepting the mandate,” the regulator mentioned.
The markets watchdog additionally highlighted that the open supply course of by the Burman Group was already underway, with over 2.31 lakh shares tendered as of February 13.
“If Mr. Gaekwad’s competing offer were permitted, those shareholders who had already tendered their shares would be unable to participate, creating an unfair situation,” the regulator mentioned within the order.
SEBI mentioned if the competing open supply is allowed to be made by the applicant, it will entail maintaining the open supply course of by the Burman Group on maintain for an unsure interval in a scenario the place the choice of regulators on the competing open supply can not even be predicted.
“The same shall not only be prejudicial to the interest of the Burman Group, an existing shareholder of the target company (REL), which has devoted considerable effort, time and resources to be able to make the open offer, but also to the shareholders who have already tendered shares in the open offer by Burman’s,” SEBI mentioned.
The regulator famous that Burman Group is a stakeholder on this course of and as a shareholder of the REL, is entitled to safety of its rights, identical to different shareholders.
The order got here after Mr. Gaekwad submitted a letter dated January 24, January 26 and February 1, to SEBI requesting to grant requisite exemption from strict enforcement of Regulation 20 of the SAST (Substantial Acquisition of Shares and Takeover) guidelines to permit him to make a competing supply for 55% stake of REL, at a worth of ₹275 per fairness share.
He had additionally sought a directive to maintain the Burman Group’s open supply in abeyance.
Later, Mr. Gaekwad filed a proper software, and the matter reached the Delhi Excessive Courtroom searching for a keep on the Burman Group’s open supply.
The courtroom, nonetheless, directed SEBI to resolve on Mr. Gaekwad’s plea whereas permitting the Burman Group’s supply to proceed.
Dabur India promoter Burman household via its 4 entities – M.B. Finmart Pvt Ltd, Puran Associates, VIC Enterprises, and Milky Funding & Buying and selling Firm – held a 21.54% stake in REL and proposed to amass an extra 5.27% from the market in September 2023, triggering an open supply requirement beneath SEBI’s Takeover guidelines.
Thereafter, a public announcement for the open supply was made on September 25, 2023, adopted by an in depth public assertion (DPS) on October 4, 2023.
The Burman Group have tried to acquire the requisite regulatory approvals with the intention to discharge the open supply obligations beneath SAST guidelines, nonetheless, the administration of REL failed to increase the required cooperation on this regard.
Consequently, SEBI, via an order dated June 19, 2024, directed REL to make crucial purposes for acquiring the required regulatory approvals.
Subsequently, after grant of approval by SEBI and RBI in December 2024, the Burman Group proceeded with the open supply course of.
Nonetheless, regulatory approvals took time, and the open supply course of might solely begin in January this 12 months with the tendering interval scheduled from January 27 to February 7.
The SEBI order got here a day after Religare Enterprises introduced that its government chairperson Rashmi Saluja ceased to be a director on its board following shareholders’ rejection of a proposal searching for her re-appointment.
Revealed – February 14, 2025 11:14 pm IST
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