Mumbai: India’s competition watchdog has written to Religare Enterprises seeking information on whether its largest shareholder, the Burman family, had sought a merger involving the company or proposed to get involved in its management or have a representation on its board.
The Competition Commission of India (CCI) has also sought communication documents exchanged between the Burmans and Religare from October 13, 2017, to September 25, 2023, the period when the promoters of FMCG major Dabur acquired shares in the financial services firm.
The regulator observed that the Burmans didn’t inform it about their initial acquisition of Religare shares and have now sought approval for their proposed purchase of a 5% stake through secondary market transactions and the planned open offer for buying an extra 26% from the company’s public shareholders.
A spokesperson for Religare confirmed that the company had received a letter from CCI. “The company has responded to the letter and would not like to comment further.” An email sent to CCI didn’t elicit any reply until Wednesday press time.
In its response to CCI’s letter, Religare said though it didn’t have any communication with the Burmans on any merger or management of the company’s affairs or on having a representation on the board, their actions show their intention to gain “control” of the financial services unit. Their initial share acquisitions combined with their proposed stake purchases and the open offer are “interconnected”, read Religare’s reply.
The Burmans made their first investment in Religare on April 19, 2018, by subscribing to share warrants representing about a 10% stake in the company. The warrants were subsequently converted into equity.
They then increased their stake to 14% and later to around 22%, marking their fourth acquisition. Next, they announced a proposal to acquire 5% of Religare shares from the secondary market and an open offer for an additional 26% stake.
“The fourth acquisition was, in fact, an artificially segregated step of a single composite transaction culminating in the notified transactions (read: open offer). … By segregating such steps, the acquirers have wrongfully evaded the requirement of obtaining the approval of the CCI… ,” Religare said.
