The high-profile battle for control of Religare Enterprises Ltd took a fresh twist on Tuesday with a Bangkok-based investor seeking the Delhi High Court’s intervention to halt the Burman family’s open offer to acquire an additional 26% stake in the financial services conglomerate.
Sapna Govind Rao, who claims to own 500 shares in Religare, urged the court to instead consider a ₹5,000-crore competing open offer by Florida-based businessman Digvijay ‘Danny’ Gaekwad. Mint has reviewed a copy of Rao’s urgent application before the court.
Just a few hours after Rao filed the court application, Religare revealed to the stock exchanges that the Securities and Exchange Board of India had returned Gaekwad’s proposal since it did not conform to the regulator’s exemption application rules under India’s takeover code.
The Baroda-born Gaekwad had on Sunday requested Sebi to allow his competing offer aimed at acquiring a 55% stake in Religare at ₹275 per share. That’s higher than the ₹235 per share open offer made by the Burmans, who own about 25.18% of Religare. The company’s shares fell nearly 3.7% on BSE to end Tuesday at ₹243.05 apiece, even as the benchmark Sensex gained 0.71%.
“The letters submitted by Digvijay Laxmansinh Gaekwad are being returned since the same is not an exemption application in terms of Regulation 11 of SEBI (SAST) Regulations, 2011,” Religare said in the exchange filing, referring to Sebi’s reply to Gaekwad’s proposal.
However, Rao has requested that minority shareholders be allowed to evaluate Gaekwad’s higher counter-offer.
Also read | Who is Danny Gaekwad—the US tycoon taking on the Burmans’ open offer for Religare?
“Proceeding with the previously approved (albeit a conditional approval where the conditions have yet not been met) acquisition by the Burman family without duly considering the Competing Offer would result in grave financial loss/prejudice to the public shareholders, including the Petitioner, who stand to benefit from the competitive price discovery mechanism envisaged under Regulation 20 of the SEBI Takeover Regulations,” stated an application filed by a lawyer representing Rao before the Delhi High Court on 28 January.
“Therefore, it is imperative that SEBI exercise its regulatory powers to evaluate and facilitate the Competing Offer, ensuring that shareholders are not deprived of a more lucrative option. Further, till such time SEBI and the RBI evaluate the Competing Offer, all acquisition proceedings must be put on hold to prevent irreversible financial harm to minority shareholders,” said the application.
The Delhi High Court is expected to hear Rao’s application on Wednesday or later.
A delaying tactic?
The battle for Religare has witnessed a series of dramatic turns ever since the Burman family announced their plans to own the company that controls India’s second-largest private health insurance firm, Care Health Insurance Ltd, and other broking and non-bank subsidiaries.
Proxy advisory firms and lawyers suggested that Rao’s petition may be a delaying tactic to prevent the acquisition of more Religare shares by the Burman family, the promoters of consumer goods company Dabur India Ltd.
“I believe a serious bidder would have done their homework regarding the regulatory timelines,” said Amit Tandon, founder and managing director of Institutional Investor Advisory Services, a Mumbai-based proxy advisory firm.
“It is in this context that the abrupt letter by Danny Gaekwad proposing to make a competing offer and then a high court petition by a Bangkok-based investor, that too relying on Gaekwad’s intention to make an offer, needs scrutiny,” he added. “If Gaekwad or any entity is really keen to take over Religare, they can revisit this at a later date or look at other opportunities in the current market.”
Sebi returned Gaekwad’s proposal for failing to meet its criteria outlined under the takeover code—his ‘competitive’ offer came after 400 days instead of the 15 days prescribed. If Gaekwad does want to re-apply, it will be considered a fresh offer, which will require him to follow a different, more extensive procedure, according to an official who declined to be identified.
Tandon added that a non-banking financial company like Religare, which operates in broking, lending, and insurance, requires significant capital, which the Burman family appears to have. “At this stage, if one compares the various offers, it seems the Burman family either has the capital or has access to institutional capital; this aspect is not fully known in the case of the alternate proposal,” he said.
The origin
The Burman family had first expressed interest in acquiring a controlling stake in Religare in September 2023. They also have been pushing for the removal of Religare chairperson Rashmi Saluja.
Saluja has voiced her dissatisfaction with the Burman family’s open offer price, delaying the company’s annual general meeting by six months. In December, an investor from Madhya Pradesh sought another court’s intervention for a stay order on the shareholder meeting. Subsequently, the court quashed the appeal and Religare’s AGM is now scheduled for 7 February.
Gaekwad’s late bid may not pass regulatory muster, Mint reported in its edition dated 27 January.
Also read | Key investors question PIL that led to HC stay on Religare AGM
“Evaluating such offers and competing offers involves not only assessing the offered price but also considering critical factors such as the offer’s alignment with investor interests and the prospective contributions of the acquirer as the controlling shareholder,” said Sumit Agrawal, a former Sebi official and founder of Regstreet Law Advisors.
Religare, Rao’s lawyers, and the Burman family did not immediately reply to Mint’s queries.
Also read | Proxy advisors call for Rashmi Saluja’s ouster from Religare
Source:https://www.livemint.com/companies/news/religare-enterprises-open-offer-religare-takeover-bangkok-investor-minority-shareholder-sebi-danny-gaekwad-burman-family-11738072853630.html