Sebi rejects Digvijay Gaekwad's plea for competing open offer in Religare deal

New Delhi, Feb 14 (PTI) Capital markets regulator Sebi on Friday rejected Digvijay Laxhamsinh Gaekwad's plea seeking an exemption to make a competing open offer for a majority stake in Religare Enterprises.

With this ruling, the Burman Group's open offer process remains on track, solidifying their acquisition bid for Religare Enterprises Ltd (REL).

The market regulator 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.

Sebi 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 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 regulator in its order, noted that Gaekwad's request did not qualify as an exemption under the norms since he was not seeking relief from making an open offer but rather permission to make a competing one against the Burman Group.

Sebi maintained that the Burman Group's public announcement date remained September 25, 2023, as per rules, and not January 18, 2025 as contended by Gaekwad.

The regulator also emphasised that Gaekwad had not applied for necessary regulatory approvals from Sebi, RBI, or other authorities. Even if he did, the approval process would be time-consuming, leading to uncertainty and further delaying the open offer.

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 markets watchdog also highlighted that the open offer process by the Burman Group was already underway, with over 2.31 lakh shares tendered as of February 13.

If, Gaekwad's competing offer were permitted, those shareholders who had already tendered their shares would be unable to participate, creating an unfair situation. the regulator said in the order.

Sebi said if the competing open offer is allowed to be made by the applicant, it would entail keeping the open offer process by the Burman Group on hold for an uncertain period in a situation where the decision of regulators on the competing open offer cannot even be predicted.

"The same shall not only be prejudicial to the interest of the Burman Group, an existing shareholder of the target company (REL), which has devoted considerable effort, time and resources to be able to make the open offer, but also to the shareholders who have already tendered shares in the open offer by Burman's," Sebi said.

The regulator noted that Burman Group is a stakeholder in this process and as a shareholder of the REL, is entitled to protection of its rights, just like other shareholders.

The order came after 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) rules to allow him to make a competing offer for 55 per cent stake of 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. PTI HG MR

Source: PTI