Religare Enterprises has said a US businessman has made a proposal to acquire a 26 per cent stake in it, the latest twist in the battle for control of the financial services company which has rejected another bid as being priced too low.
The Indian billionaire Burman family, which has founded and controls consumer goods conglomerate Dabur India, raised its stake in Religare to nearly 25 per cent in September 2023, triggering a so-called open offer to buy more shares.
Through the open offer process, which starts on January 27, the Burmans plan to buy around 26 per cent more of Religare to bolster their presence in India’s rapidly growing financial services sector, but Religare’s independent directors flagged this week the offer price of ₹235 per share was too low.
In a stock exchange disclosure, Religare shared a letter from US entrepreneur Digvijay “Danny” Gaekwad’s firm requesting permission from Sebi to make an open offer of ₹275 per share for the Indian company, a 17 per cent premium to the Burman offer.
In a letter addressed to Sebi chairperson Madhabi Puri-Buch to launch the competing offer, Gaekwad from Danny Gaekwad Developments and Investments, a real estate investment firm, said that the Burmans’ open offer grossly undervalues the real worth of REL and is to the detriment of public shareholders.
“Our proposed competing offer price of ₹275 would provide a fair and reasonable exit opportunity to public shareholders,’’ he added.
Gaekwad said in the letter that the Burmans’ open offer also fails to disclose how they propose to comply with the RBI mandated condition on consolidation of non-banking finance companies (NBFCs) within Religare and the Burman groups and the impact thereof on REL shareholders.
Here it noted that the Burmans’ proposal to public shareholders “conspicuously silent’’ on the nature of the approval granted by the RBI for the open offer on December 9, 2024. “Such approval is available in the public domain and is clearly conditional on consolidation of multiple NBFCs within Burman group and Religare group,’’ he said.
On undervaluation, the letter said, “At the time the offer was made on September 25, 2023, the offer price was already at a discount of 15 per cent to REL’s prevailing market price of approximately ₹271 per share. Even considering the closing price of REL shares on January 22, 2025, the Burmans’ open offer price is at a steep discount of 7 per cent’’.
“I believe that the business of REL is robust and will do even better with a stable and committed promoter/investor that is able to provide adequate capital and undivided attention to the business. Unlike the Burmans, we do not have any other NBFC in our group and will be able to provide our undivided attention and infuse capital in the business,” he stated.