Mumbai: The Burman family, which is seeking to take over Religare Enterprises Ltd (REL), has accused the latter’s management of blocking its planned open offer in a letter to the Reserve Bank of India (RBI). Religare denied receiving any intimation from the central bank about any communication regarding this matter.
REL led by chairperson Rashmi Saluja has sought to obstruct the applications that need to be sent to the regulators for changes in shareholding, control and management of REL, said the letter by the Burmans, promoters of the Dabur Group.
The action by the REL management “impedes the ability of regulatory authorities to perform their obligations,” the Burmans said in the letter, a copy of which ET has seen. “It also costs the public shareholders of Religare.”
On February 1, the Burmans raised their stake in REL to 25.18%, past the threshold for triggering an open offer for an additional 26% of the company, by buying 13.2 million shares from the open market in a block deal for Rs 308.8 crore, increasing its holding from 21.18%. The successful completion of an open offer will give the Burmans a stake in excess of 51%.
For the open offer to proceed, the RBI and the Securities and Exchange Board of India (Sebi) have to give their approvals, which are pending. The RBI told the Burman family on February 5 that the application for approval of the open offer had to be filed by the company.
REL is a financial conglomerate that houses units engaged in lending, health insurance and stock broking. As an entity answerable to multiple regulators, any change in control requires approvals from all of them. RBI approval is needed as REL has a non-banking finance company (NBFC) unit. Similarly, approvals are needed from Sebi and the Insurance Regulatory and Development Authority of India (IRDAI).
As per the initial timeline, the open offer was to start on November 21, 2023, and close on December 5, 2023.
In October, after announcing the plan to increase their stake, the Burmans had sought “specific information from REL in order to get a complete set of information for the application,” they said in the letter. “The company had chosen not to provide the information” or make the application to the RBI.
Having “exhausted all possible avenues to support the RBI in processing the application,” the Burmans said they were writing to the RBI seeking regulatory intervention.
They also asked the regulator to consider a previous application submitted late November 2023. That application was made to comply with the the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011, that requires all statutory approvals by an acquirer (Burman family in this case) in order to complete the open offer without ‘any default, neglect or delay.’
The Burman’s have cited their statutory obligation under Regulation 18 for pressing upon the regulator.
The Burman family was unavailable for comment.
“This is absolutely false,” a Religare spokesperson told ET. “The RBI has never asked the Religare board to file any application or written any such letter to us.”
Financial services industry executives said a quick resolution of the takeover battle is key.
The Religare board and Saluja have challenged the takeover bid by the Burmans and said they won’t be able to meet the regulatory “fit and proper” criteria for running a financial services company. They have written multiple letters to the regulators, asking them to investigate the Burman offer.
After endorsing the offer initially, the board became hostile to the bid, writing to Sebi: “The company has been presented with such extraordinary adverse facts and allegations against the acquirers… making it important to review its original objective and neutral position.”
The February 1 purchase by the Burmans was at Rs 233.98 per share, slightly below the open offer price of Rs 235 a share that had been announced. The family’s investment vehicles—MB Finmart, Puran Associates and VIC Enterprises—were used for the purchase.
