Open Offer
SEBI junks Danny Gaekwad exemption plea for Religare Enterprises competing offer
This story was originally published at 19:45 IST on 14 February 2025
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NEW DELHI – The Securities and Exchange Board of India Friday rejected an application from US investor Danny Gaekwad Developments & Investments seeking an exemption from the market regulator's rules to make a competing open offer for 55% of the outstanding equity share capital of Religare Enterprises Ltd. at a price of INR 275 per equity share.
SEBI said that though the price in Danny Gaekwad's proposed open offer was higher than the offer of the Burman family of Dabur India Ltd. by INR 40 per equity share at INR 275 per share, the applicant firm had failed to demonstrate its ability to meet the financial obligation in making the competing offer. As of the date of the order, Danny Gaekwad had failed to deposit INR 6 billion, as directed by the Supreme Court, which would have shown the firm's commitment towards making the competing open offer, the regulator said.
In the absence of adequate proof of financial resources required for making the competing open offer, the application by Danny Gaekwad does not appear to be bona fide, the regulator said, and may be aimed solely at hindering the open offer process.
SEBI also questioned Danny Gaekwad's merchant banker PL Capital Markets Pvt. Ltd.'s role in performing due diligence while taking on the assignment of the competing open offer. Danny Gaekwad had paid the application money days after submitting the application, that too after a query in this regard from SEBI, the regulator said. The merchant banker, during the hearing Friday, appeared clueless about the credentials of the applicant and was found to have failed to do the due diligence and know-your-customer of the client before accepting its mandate, the regulator noted.
The market regulator said the grant of exemption sought by Danny Gaekwad would not be in the interests of the shareholders. A competing offer that is not backed by financial capability would disrupt market dynamics and erode investor confidence, it said. "In view of the above, I do not deem it fit to grant the exemptions as sought by the applicant," the regulator added.
In 2023, the Dabur India Ltd. promoter Burman family, which was holding 21.54% stake in Religare Enterprises, proposed to buy up to 5.27% more stake from the market at a price of not more than INR 235 per equity share. This would have increased the family's shareholding beyond 25%, as a result of which it was obliged to make an open offer to the shareholders of Religare Enterprises.
Accordingly, the Burman family made a public announcement in 2023 to acquire a further 26% stake in Religare Enterprises. In December, the market regulator and the Reserve Bank of India granted approval for the family's open offer. The tendering period opened on Jan. 27 and was to close on Feb. 7.
In the meantime, Danny Gaekwad submitted a letter to SEBI, requesting the requisite exemption to allow it to make a competing offer for 55% of the outstanding equity share capital of Religare Enterprises at a price of INR 275 per equity share. Since the letter was not a formal exemption application, the market regulator had returned it.
Thereafter, Danny Gaekwad and a minority shareholder of Religare Enterprises had moved the apex court praying for a stay on the open offer by the Burmans. On Feb. 4, the court had directed SEBI to decide in the shortest possible time on the application filed later by Danny Gaekwad seeking an exemption for its competing offer. The court had also asked Danny Gaekwad to deposit INR 6 billion by Thursday to prove its bona fides. The court had said the open offer by the Burmans would continue subject to the outcome of the proceedings.
On Friday, shares of Religare Enterprises ended 1.5% lower at INR 235.21 on the National Stock Exchange. End
Reported by Surya Tripathi
Edited by Rajeev Pai
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