Market regulator Sebi examining Burmans' open offer for Religare Ent

A corporate battle is brewing between the current management of Religare Enterprises and the Burman family of Dabur Group over control of the company.
 

On Thursday, top executives of Religare Enterprises, led by its Chairperson Rashmi Saluja, met with top officials of the Securities and Exchange Board of India (Sebi) to apprise the regulator about the open offer made by the Burman family and the disclosures made by the company so far.
 

The market regulator is studying the open offer document and the disclosures made by the Burmans and has sought additional information from the company, according to a source. On September 26, the Burman family announced the open offer to acquire an additional 26 per cent stake in Delhi-based Religare Enterprises, costing up to Rs 2,116 crore. The open offer was made after the Burman family increased its stake from 14 per cent to 21.5 per cent by buying shares from the market on August 16 for Rs 218 per share, at a cost of Rs 534 crore.
 

However, the board has appointed two independent valuers because they believe that the valuation of the company and its subsidiaries is not reflected in the current market price (CMP), and the firm’s shares are at least 33 per cent higher than their CMP, as stated by a top source close to the management.
 

On Thursday, Religare shares closed at Rs 234 per share, giving it a total valuation of Rs 7,587 crore. When contacted, Religare Enterprises declined to comment. An email sent to Sebi on Wednesday did not receive any response.

 

When contacted, Mohit Burman, chairman of Dabur India, stated that his private entities have not received any communication from Sebi so far. “We have acquired shares in accordance with applicable law and have made the open offer in line with regulations,” he said.
 

Burman mentioned that they have the support of the shareholders and the independent directors, as the open offer is in the best interests of the company and all its shareholders. “We are not looking to change the board. We only intend to appoint our directors to the board in accordance with the regulations,” Burman said in a statement.
 

The open offer by the Burman-owned entities at the rate of Rs 235 per share is expected to be launched on November 21, subject to Sebi approval. The last date for receiving Sebi observations on the open offer is November 2, provided Sebi does not seek clarifications or additional information, according to the open offer document posted by the firm on Wednesday.
 

In the open offer document, the Burmans stated that they intend to take control of the company once the open offer is concluded, following the provisions of the Sebi (Substantial Acquisition of Shares and Takeovers, or SAST) Regulations. They reserve the right, in the interim period, pending completion of the open offer, to appoint directors to the board of directors of the company and take all measures to assume control of the company, subject to complying with the provisions of the Sebi (SAST) Regulations.

 

The docum­ent mentioned that the acq­uirers intend to review the man­agement structure of the company and its subsidiaries and reserve the right to require the company and its subsidiaries to implement such changes. 
 

However, the current management of the company beli­eves changing the current stru­cture at this stage would lead to instability and derail the work of the past five years, which has turned the company around.

“We successfully executed a one-time settlement of Religare Finvest with the secured lenders, which helped turn the company around,” said the source.
 

Under the present management, Religare was also planning to launch the initial public offering of Care Health Insurance, which reported a gross written premium of Rs 5,237.69 crore in 2022-23, a growth of 33 per cent over the previous financial year, and reported a profit before tax of over Rs 327.96 crore, according to its annual report.
 

Bankers said the health insurance firm is currently the most valuable arm of the company.