Religare vs Burmans: Gaekwad seeks exemption from open offer regulations

In the latest development in Religare Vs the Burman family saga, US-based investor Danny Gaekwad has sought exemption from open offer regulations in a fresh letter to SEBI Chairperson Madhabi Puri Buch, Religare Enterprises Ltd. says in an exchange filing today.

He has requested SEBI to grant exemption from strict enforcement of Regulation 20(1) and Regulation 20(5) of the SAST Regulations; and allow his company to make public announcements for competing offers about Burmans’ Open Offer under Regulation 20 of the SAST Regulations; and also sought directions to keep Burmans’ Open Offer in abeyance so that the public shareholders can tender their shares in both, the Burmans’ Open Offer as well as our proposed competing offer.

Reasoning that SEBI has "wide powers to grant exemptions" with respect to an open offer process under Regulation 11(1), he wrote: "We hereby submit this application under Regulation 11(1) of SAST Regulations seeking exemption from strict enforcement of Regulation 20(1) and Regulation 20(5) of SAST Regulations concerning our proposed competing offer," the letter says.

Hoping that SEBI will evaluate the substantive aspects of his application favourably and condone the delay in making a competing offer, given the public interest involved, he urged the regulator to allow his entity to make a competing offer at a higher price of Rs 275 per share compared to Burmans’ open offer of Rs 235.

Notably, SEBI on January 28, 2024, had rejected a request from Gaekwad, who had sought permission to make a "competing open offer" for a 26% stake in Religare. SEBI, in its response to his application, said: “The letters submitted by Digvijay Laxmansinh Gaekwad are being returned since the same is not an exemption application in terms of Regulation 11 of SEBI (SAST) Regulations, 2011.”

Grounds for seeking exemption

In his rationale for the exemption, Gaekwad writes that Regulation 20(1) of the SAST Regulations stipulates a 15-working-day window for competing offers following the detailed public statement of the initial acquirer, the Burman Family Acquirer Entities. "Burmans’ Open Offer presents an unprecedented situation full of legal and regulatory complexities and thus should be treated accordingly by the SEBI."

He writes that despite the publication of the public announcement on September 25, 2023, and the detailed public statement on October 4, 2023, the precise timeline for the open offer remained "uncertain" due to pending litigation and regulatory approvals.

The Reserve Bank of India's (“RBI”) approval of the Burmans’ Open Offer on December 9, 2024, mandated the consolidation of NBFCs in both the Burman and REL groups. "However, at this point in time, there was no clarity as to whether Burmans’ open offer could proceed without satisfying such consolidation condition first if at all it could proceed," he wrote.

"We note that the Burmans’ Open Offer, initially slated for completion by December 27, 2023, as disclosed in the draft letter of offer dated October 11, 2023. More than a year has lapsed since such identified last date and the circumstances around Burmans’ Open Offer have changed materially. Now that the LOF was published on January 18, 2025, we were able to ascertain a crystallised timeline of various activities under the open offer. Burmans’ offer achieved the essential element of certainty after the publication of the LOF and publication of the recommendations of the committee of independent directors of REL, which we believed was the right occasion for us to make a competing offer," says the letter.

Gaekwad says his competing offer offers a significant premium to REL's public shareholders and is available to a larger pool of public shareholders when compared with an Burmans’ Open Offer. Our proposed competing offer is also more favourable to other stakeholders involved in the process, including the Target Company."

Requesting SEBI to consider these exceptional circumstances and grant them permission to proceed with the competing offer, he said his company is "very disappointed" that despite their genuine attempts to make a competing offer pursuant to the January 24 letter and January 26 letter, SEBI chose to return its requests.