SEBI rejects Digvijay Gaekwad’s plea for competing open supply in Religare deal

Capital markets regulator Securities and Trade Board of India (SEBI) on Friday (February 14, 2025) rejected Digvijay Laxhamsinh Gaekwad’s plea searching for an exemption to make a competing open supply for a majority stake in Religare Enterprises.

With this ruling, the Burman Group’s open supply course of stays on monitor, solidifying their acquisition bid for Religare Enterprises Ltd (REL).

The market regulator in an order acknowledged that the value provided by Mr. Gaekwad was ₹275 per share within the proposed open supply which was ₹40 greater than the Burman Group’s supply of ₹235 per share.

“The applicant (Danny Gaekwad Developments & Investments, Florida) has did not show his potential to satisfy the monetary obligation for making the competing open supply,” it acknowledged.

SEBI additionally noticed that the “applicant has did not deposit ₹600 crore, as directed by the Supreme Court docket of India vide its order dated February 7, 2025, learn with order dated February 12, 2025, which might have proven the applicant’s dedication in the direction of making the competing open supply”.

Within the absence of enough proof of monetary sources required for making the competing open supply, the appliance doesn’t look like bonafide. It appears frivolous and aimed solely at hindering the open supply course of, the order handed by SEBI’s whole-time member Ashwani Bhatia stated.

“I …. eliminate the appliance dated February 1, 2025, filed by the applicant,” Ms. Bhatia stated within the order.

The regulator in its order, famous that Mr. Gaekwad’s request didn’t qualify as an exemption beneath the norms since he was not searching for reduction from making an open supply however somewhat permission to make a competing one in opposition to the Burman Group.

SEBI maintained that the Burman Group’s public announcement date remained September 25, 2023, as per guidelines, and never January 18, 2025, as contended by Mr. Gaekwad.

The regulator additionally emphasised that Mr. Gaekwad had not utilized for crucial regulatory approvals from SEBI, RBI, or different authorities. Even when he did, the approval course of can be time-consuming, resulting in uncertainty and additional delaying the open supply.

SEBI additionally questioned the position of Mr. Gaekwad’s service provider banker, PL Capital Markets Pvt. Ltd., in doing the due diligence whereas taking over the project of the competing open supply.

“The service provider banker was clueless concerning the credentials of Mr. Gaekwad and was discovered to have did not do correct due diligence and KYC of his consumer earlier than accepting the mandate,” the regulator stated.

The markets watchdog additionally highlighted that the open supply course of by the Burman Group was already underway, with over 2.31 lakh shares tendered as of February 13.

“If Mr. Gaekwad’s competing supply had been permitted, these shareholders who had already tendered their shares can be unable to take part, creating an unfair scenario,” the regulator stated within the order.

SEBI stated if the competing open supply is allowed to be made by the applicant, it might entail retaining the open supply course of by the Burman Group on maintain for an unsure interval in a scenario the place the choice of regulators on the competing open supply can’t even be predicted.

“The identical shall not solely be prejudicial to the curiosity of the Burman Group, an present shareholder of the goal firm (REL), which has devoted appreciable effort, time and sources to have the ability to make the open supply, but in addition to the shareholders who’ve already tendered shares within the open supply by Burman’s,” SEBI stated.

The regulator famous that Burman Group is a stakeholder on this course of and as a shareholder of the REL, is entitled to safety of its rights, identical to different shareholders.

The order got here 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) guidelines to permit him to make a competing supply for 55% stake of REL, at a value of ₹275 per fairness share.

He had additionally sought a directive to maintain the Burman Group’s open supply in abeyance.

Later, Mr. Gaekwad filed a proper utility, and the matter reached the Delhi Excessive Court docket searching for a keep on the Burman Group’s open supply.

The courtroom, nonetheless, directed SEBI to determine on Mr. Gaekwad’s plea whereas permitting the Burman Group’s supply to proceed.

Dabur India promoter Burman household by way of its 4 entities – M.B. Finmart Pvt Ltd, Puran Associates, VIC Enterprises, and Milky Funding & Buying and selling Firm – held a 21.54% stake in REL and proposed to amass an extra 5.27% from the market in September 2023, triggering an open supply requirement beneath SEBI’s Takeover guidelines.

Thereafter, a public announcement for the open supply was made on September 25, 2023, adopted by an in depth public assertion (DPS) on October 4, 2023.

The Burman Group have tried to acquire the requisite regulatory approvals in an effort to discharge the open supply obligations beneath SAST guidelines, nonetheless, the administration of REL failed to increase the required cooperation on this regard.

Consequently, SEBI, by way of an order dated June 19, 2024, directed REL to make crucial purposes for acquiring the required regulatory approvals.

Subsequently, after grant of approval by SEBI and RBI in December 2024, the Burman Group proceeded with the open supply course of.

Nevertheless, regulatory approvals took time, and the open supply course of may solely start in January this 12 months with the tendering interval scheduled from January 27 to February 7.

The SEBI order got here a day after Religare Enterprises introduced that its government chairperson Rashmi Saluja ceased to be a director on its board following shareholders’ rejection of a proposal searching for her re-appointment.