RBI approves Burman family's stake hike in Religare with conditions

Financial services company Religare Enterprises today said the Reserve Bank of India (RBI) has allowed the Burman family to increase its shareholding by making an open offer for an additional stake.

The Burmans had announced their intent to increase their stake by buying an additional 26% via an open offer, which faced opposition from the company led by Executive Chairperson Rashmi Saluja.

"We convey our approval for the proposed increase in shareholding of existing shareholders (hereon referred to as 'acquirers' viz. Puran Associates Private Limited, VIC Enterprises Private Limited, M.B. Finmart Private Limited and Milky Investment & Trading Company)," the RBI's letter to the Religare Enterprises chairman states.

The acquirers are all systematically important non-deposit-accepting non-banking financial companies (NBFCs) engaged in the business of making investments in capital markets and providing secured and unsecured loans. They are controlled by members of the Burman family, the promoters of Dabur India.

The RBI approval comes in the wake of a spat between Rashmi Saluja-led Religare and with Burman family of Dabur India. The Burman family had attempted to increase the stake in Religare, which was opposed by the Religare board, citing "irregularities". Burmans, on the other hand, had alleged that the Religare management was obstructing it from acquiring more stakes. Religare had moved the appellate tribunal (SAT) after SEBI in June 2024 directed it to seek regulatory approval for the Burman family’s open offer.

As per the conditions laid down for the approval by the RBI, the acquirers (the Burman family) have been told to consolidate the NBFCs in the resulting structure/group (both Burman and Religare group) by March 31, 2026. They will submit a concrete and specific consolidation plan, with specific timelines, duly supported by board resolutions from each of the NBFCs, in the next 90 days.

Any adverse action against the UBOs (ultimate beneficial owners) of the acquirers by law enforcement agencies or any order passed by any regulator or court, impacting the entities or individuals or the acquisition itself will be intimated to the RBI, immediately, it said.

If any adverse information or discrepancies in the information are submitted in respect of acquirers or their promoters or promoter group, the RBI says it reserves the right to impose additional conditions, including the withdrawal of the approval itself as deemed fit.

Religare will inform the Reserve Bank about the date on which the acquirers have acquired 26% or more of the paid-up share capital of the NBFC.

If the acquirers fail to acquire the proposed shareholding in one year, it will stand cancelled. After execution of the proposed change in shareholding, if the shareholding of the acquirers in the NBFC falls below 26%, prior approval of the RBI will be required to increase the shareholding of the acquirers in the NBFC to 26% or more.

Amid the development, meanwhile, shares of Religare are trading 4% higher compared to the last trading session, at Rs 288.65 on the BSE.

SEBI & SAT orders on Religare vs Burman Family Spat

Markets watchdog Securities and Exchange Board of India (SEBI) in June 2024 had ordered Religare to seek statutory approvals from regulatory authorities regarding an open offer by Dabur India promoter Burman family after it observed that even after explicit advice, Religare refused to take appropriate steps for making applications to regulators.

SEBI had issued directions against Religare Enterprises, its chairperson and five others, including Malay Kumar Sinha, Hamid Ahmed, Praveen Kumar Tripathi, Ranjan Dwivedi and Preeti Madan.

SEBI had said that Religare could not be allowed to "impinge on the rights of the shareholders and their fate can't be left hanging in balance".

The Barman group had accused the Religare board and its chairperson Rashmi Saluja of obstructing its open offer. "The right of the shareholders of the Target Company is sacrosanct and cannot ordinarily be interfered with. The exercise of said right by the shareholders cannot be held hostage to the designs of the existing management of the target company, especially in such cases where the existing management is hostile to the acquirers and faces a conflict of interest in facilitating the acquisition of shares/control by the acquirers in an open offer, due to proposed change in control," SEBI had said.

Following this, the Securities Appellate Tribunal (SAT) had directed Religare to comply with the SEBI order, asking it to seek all the necessary regulatory approvals for the open offer floated by the Burman family.