Regulatory battle unfolds as Gaekwad pushes for a higher bid for Religare

The battle for control of Religare Enterprises Ltd. (REL) has taken a new twist, as Florida-based businessman Danny Gaekwad insists his bid for a controlling stake in the company is far from over.

Despite the Securities and Exchange Board of India (SEBI) returning his letters, addressed to Chairperson Madhabi Puri Buch, on Tuesday, Gaekwad remains steadfast in his pursuit of a competing offer.

“This is not over yet”, Gaekwad insisted and suggesting that the fight for Religare is still unfolding. “I will do my best to protect my interest and Religare shareholders’ interests”, Gaekwad told businessline when asked about his next steps on SEBI’s recent move.

No hostile takeover bid

Gaekwad said that he wants to be seen as a “Friend of REL Board and REL shareholders” and that he is not looking to do a hostile takeover. “I am willing to work closely with the current REL Board and shareholders. I am a value buyer. I see tremendous value in REL even today and am willing to offer a higher price to public shareholders.”

Despite SEBI returning his letter, Gaekwad does not interpret it as a “rejection” of his request to place a competing bid. Instead, he plans to approach the regulator again by following the required procedural requirements, including submitting the prescribed form along with the requisite fees.

Competing offer

Gaekwad has put forth an offer of ₹275 per share, which he argues is significantly more beneficial for Religare’s thousands of minority shareholders than the current open offer price of ₹225 per share from the Bajaj Group. 

He believes SEBI should consider  this into account before making a final decision on whether to allow a competing bid.

The controversy surrounding the Religare takeover intensified last week, with Gaekwad challenging the acquisition process and urging regulatory intervention. His concerns primarily revolve around ensuring that shareholders get the best possible deal, and he has taken steps beyond SEBI to make his case. 

In a significant move, Gaekwad confirmed that a letter has also been sent to Reserve Bank of India (RBI) Governor Sanjay Malhotra on the same issue, seeking his intervention.

The Religare takeover saga has drawn considerable attention due to its high stakes and the players involved. Religare Enterprises, a diversified financial services group, has been at the centre of strategic interest, with multiple parties now vying for control. 

The company has seen major upheavals in the past, including governance and financial challenges, making its acquisition a critical event in the financial sector.

Gaekwad’s attempt to make a competing offer comes amid an open offer by Burman Group entities to acquire additional 26 per cent shares of the Religare Enterprises and cement their control. The Burmans have steadily increased their stake in the company and have already secured a majority position. 

However, Gaekwad’s move introduces fresh uncertainty into the takeover process, potentially complicating the path forward. Gaekwad said he is willing to offer ₹275 per share 

Regulatory challenges

For SEBI, the situation presents a regulatory challenge in ensuring a fair and transparent process while adhering to market norms. The regulator will need to assess whether Gaekwad’s competing bid meets the necessary conditions and whether it can be entertained at this stage of the acquisition process.

With Gaekwad determined to move forward, the coming days could see further developments, including a formal response from SEBI or RBI, company observers said.

If regulatory authorities decide to reconsider Gaekwad’s proposal, it could reshape the dynamics of the Religare takeover. On the other hand, if his bid is ultimately not allowed, it could raise questions about the openness of India’s corporate takeover framework, corporate observers said.

For now, Gaekwad remains steadfast, signalling  that he is prepared to take all necessary steps to keep his bid alive. 

Besides letters to the SEBI Chairperson, Gaekwad also wrote to the REL Board conveying his intent to acquire a controlling interest in Religare Enterprises. Gaekwad’s letters sought SEBI permission to be exempted from various statutory compliance-related timelines specified under the Takeover code.