Sebi rejects Digvijay Gaekwad's application seeking open offer in Religare

Capital markets regulator Sebi on Friday dismissed an application filed by Digvijay Laxhamsinh Gaekwad seeking an exemption to make a competing open offer for a majority stake in Religare Enterprises Ltd (REL).

Sebi in an order stated that the price offered by Gaekwad was Rs 275 per share in the proposed open offer which was Rs 40 higher than the Burman Group's offer of Rs 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.

The markets watchdog also observed that the "applicant has failed to deposit Rs 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 by the applicant 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," Bhatia said in the order.

The Securities and Exchange Board of India (Sebi) also questioned the role of 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 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 order came after Gaekwad through his entity (Danny Gaekwad Developments & Investments, Florida) submitted a letter dated January 24, January 26 and February 1, to Sebi requesting to grant requisite exemption under the Takeover rules to allow him to make a competing offer for 55 per cent equity stake of REL, at a price of Rs 275 per equity share.

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.