Gaekwad bid for Religare refused, 'lacks fin proof'

Mumbai: The Securities and Exchange Board of India (Sebi) has turned down a proposal by Indian-American investor Digvijay 'Danny' Gaekwad for 55% in Religare Enterprises, owing to insufficient proof of financial ability. This strengthens the position of Dabur's Burman family in their bid to gain control of the New Delhi-based financial services firm.

"In the absence of adequate proof of financial resources required for making the competing open offer, the application by the applicant (Gaekwad) does not appear to be bona fide. It seems frivolous and aimed solely at hindering the open offer process," said Ashwani Bhatia, whole-time member of Sebi, in an order on Friday.

Gaekwad had requested Sebi's exemption under takeover rules to propose ₹275 a share for Religare, offering a 17% premium to the Burmans' offer of ₹235. He was obligated to deposit ₹600 crore by Thursday in a Reserve Bank of India-nominated bank account to prove his financial capacity.


However, his inability to meet the deadline raised doubts at Sebi. The markets regulator said, "It does not seem appropriate to allow the competing open offer (by Gaekwad), only on grounds that the price offered by him is more than" the Burmans' offer.

'Banker Clueless'
"A competing offer that is not backed by financial capability would disrupt market dynamics," Sebi said.

The Burmans are the largest shareholder of Religare, with over 25%. Rashmi Saluja, who had resisted the Burmans' takeover attempts, has been removed as Religare chairperson.

Regarding Gaekwad's offer, Bhatia also questioned the due diligence done by PL Capital Markets. He added that the banker seemed "clueless" about Gaekwad's credentials during the hearing and failed to conduct proper due diligence and KYC (know your customer) before accepting the mandate.

The investor did not appear for a virtual hearing before Sebi on Friday. The Burmans' open offer concluded on Thursday, with a total of about 231,025 shares tendered.

"In this situation, if the competing open offer is allowed to be made by the applicant (Gaekwad), shareholders who have tendered shares in the open offer made by Burman Group would be unable to participate in competing open offer," Sebi said.

The markets regulator also said that allowing Gaekwad's offer would entail keeping the open offer process by the Burmans on hold for a certain period. This would be prejudicial to the interests of the latter as well as shareholders who had already tendered shares, it added.

"I find that the date of the public announcement of the Burman Group has to be taken as September 25, 2023, and not January 18, 2025, as contended by the applicant (Gaekwad). I note that January 18, 2025, is the date of dispatch of letter of offer by the Burman Group and the same cannot be treated as the date of public announcement," Bhatia said.

According to takeover rules, the public announcement of a competing open offer must be made within 15 working days of the date of a detailed public statement made by a proposed acquirer.