Capital markets regulator Securities and Exchange Board of India (SEBI) on Friday (February 14, 2025) rejected Digvijay Laxhamsinh Gaekwad’s plea seeking an exemption to make a competing open offer for a majority stake in Religare Enterprises.
With this ruling, the Burman Group’s open offer process remains on track, solidifying their acquisition bid for Religare Enterprises Ltd (REL).
The market regulator in an order stated that the price offered by Mr. Gaekwad was ₹275 per share in the proposed open offer which was ₹40 higher than the Burman Group’s offer 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 stated.
SEBI also observed 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”.
In the absence of adequate proof of financial resources required for making the competing open offer, the application does not appear to be bonafide. It seems frivolous and aimed solely at hindering the open offer process, the order passed by SEBI’s whole-time member Ashwani Bhatia said.
“I …. dispose of the application dated February 1, 2025, filed by the applicant,” Ms. Bhatia said in the order.
The regulator in its order, noted that Mr. Gaekwad’s request did not qualify as an exemption under the norms since he was not seeking relief from making an open offer but rather permission to make a competing one against the Burman Group.
SEBI maintained that the Burman Group’s public announcement date remained September 25, 2023, as per rules, and not January 18, 2025, as contended by Mr. Gaekwad.
The regulator also emphasised that Mr. Gaekwad had not applied for necessary regulatory approvals from SEBI, RBI, or other authorities. Even if he did, the approval process would be time-consuming, leading to uncertainty and further delaying the open offer.
SEBI also questioned the role of Mr. Gaekwad’s merchant banker, PL Capital Markets Pvt. Ltd., in doing the due diligence while taking on the assignment of the competing open offer.
“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 said.
The markets watchdog also highlighted that the open offer process 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 said in the order.
SEBI said if the competing open offer is allowed to be made by the applicant, it would entail keeping the open offer process by the Burman Group on hold for an uncertain period in a situation where the decision of regulators on the competing open offer cannot 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 said.
The regulator noted that Burman Group is a stakeholder in this process and as a shareholder of the REL, is entitled to protection of its rights, just like other shareholders.
The order came 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) rules to allow him to make a competing offer for 55% stake of REL, at a price of ₹275 per equity share.
He had also sought a directive to keep the Burman Group’s open offer in abeyance.
Later, Mr. Gaekwad filed a formal application, and the matter reached the Delhi High Court seeking a stay on the Burman Group’s open offer.
The court, however, directed SEBI to decide on Mr. Gaekwad’s plea while allowing the Burman Group’s offer to proceed.
Dabur India promoter Burman family through its four entities – M.B. Finmart Pvt Ltd, Puran Associates, VIC Enterprises, and Milky Investment & Trading Company – held a 21.54% stake in REL and proposed to acquire an additional 5.27% from the market in September 2023, triggering an open offer requirement under SEBI’s Takeover rules.
Thereafter, a public announcement for the open offer was made on September 25, 2023, followed by a detailed public statement (DPS) on October 4, 2023.
The Burman Group have attempted to obtain the requisite regulatory approvals in order to discharge the open offer obligations under SAST rules, however, the management of REL failed to extend the required cooperation in this regard.
Consequently, SEBI, through an order dated June 19, 2024, directed REL to make necessary applications for obtaining the required regulatory approvals.
Subsequently, after grant of approval by SEBI and RBI in December 2024, the Burman Group proceeded with the open offer process.
However, regulatory approvals took time, and the open offer process could only commence in January this year with the tendering period scheduled from January 27 to February 7.
The SEBI order came a day after Religare Enterprises announced that its executive chairperson Rashmi Saluja ceased to be a director on its board following shareholders’ rejection of a proposal seeking her re-appointment.
Published – February 14, 2025 11:14 pm IST
