Sebi rejects Digvijay Gaekwad's plea for Religare Enterprises open offer

US-based entrepreneur had sought nod to launch competing open offer

The Securities and Exchange Board of India (Sebi) on Tuesday returned a letter by the Florida-based entrepreneur Digvijay ‘Danny’ Gaekwad seeking permission to make a “competing open offer” for equity shares of Religare Enterprises (REL).

 

In a disclosure made to the exchanges, the financial services firm shared the letter sent by Sebi in response to Gaekwad’s proposal seeking permission to acquire 55 per cent of REL at Rs 275 per share. 

 

“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,” said the market regulator.

 

Sources said Gaekwad’s offer did not stand ground with Sebi as it failed to come within the stipulated timeline and didn’t follow the right process of appointing investment bankers.

 

Gaekwad made the competing offer at a 17 per cent premium against the Dabur promoter Burman family. The letter by Gaekwad stated that the Burmans’ open offer price of Rs 235 per equity share “grossly undervalues” the real worth of REL, and is to the detriment of public shareholders.

 

Earlier, independent directors of REL had also urged shareholders to take into account the low offer price by the Burman family. Legal players said Gaekwad would still have the option to approach the Securities Appellate Tribunal (SAT) to challenge Sebi’s decision.

 

The open offer by the Burman-led entities to acquire an additional 26 per cent of REL opened on Monday and is scheduled to close on February 7. Following the open offer, the Burmans may end up in control of REL. The company’s current management, led by Rashmi Saluja, has been against the offer.

 

Burmans objected to Gaekwad's letter to Sebi, stating that the competing offer should have been made 15 days from the date of the public statement, which is October 4, 2023. The Burman group had added that the letter lacked substance, and bonafides, offered no indication of any source of funds, and was made to mislead the public shareholders of REL.

 

Earlier, a plea was filed in the Madhya Pradesh High Court seeking monitoring of the acquisition which had led to a stay on the AGM of the company for a short period. However, the plea was dismissed by the high court as the petitioner was not a shareholder in the company.

 

Four entities owned by the Burman family in September 2023 purchased an additional 5.27 per cent stake through the open market. This triggered an open offer as they already held a 21.54 per cent stake in the financial services firm.

 

The Burman family is the single-largest shareholder in REL but has no board representation. REL had filed for the nod from regulators for the open offer in August 2024, following SAT directions. It was granted conditional approval by the Reserve Bank of India (RBI). Shares of REL declined 3.7 per cent to close at Rs 243 on Tuesday.  When contacted, US based entrepreneur, Danny Gaekwad said his fight to acquire Religare is not over. "Who has lost the money? It's the small shareholders. I was offering Rs 275 a share and far above the current market price. Yet the Sebi has returned my application. This fight is not over," Gaekwad said from Florida, adding that his team is looking into all legal options to reply to Sebi letter of Tuesday.       

Pipe dream

 

> Digvijay Gaekwad wrote to Sebi proposing a counter offer at Rs 275 per share, 17% premium to the offer price by Burman family

> The US-based entrepreneur showed intent to buy up to 55% stake in REL

> Burmans objected the competing offer stating it has come much beyond the 15-day timeline granted under regulations

> The open offer by Burman family at Rs 235 per share opened on January 27 and will close on February 7