Burmans get RBI nod for 26% Religare stake offer, await Sebi approval

The RBI grants conditional approval for the Burman family's 26% stake offer in Religare, with restrictions on board changes. Sebi approval is still pending amid valuation disputes

The Reserve Bank of India (RBI) has granted conditional approval to the Burman family of Dabur India Ltd for an open offer to acquire an additional 26 per cent stake in Religare Enterprises, according to The Economic Times. The approval is subject to conditions, including maintaining the current management structure and refraining from appointing new directors for now.

 

The RBI’s approval, valid for one year, marks a significant step in the Burman family’s bid for majority control of Religare Enterprises. However, changes to the board, such as appointing directors Arjun Lamba, Abhay Agarwal, Ramanathan Gurumurthy, and Suresh Mahalingam, will require further approval if the family’s stake falls below 26 per cent.

 

Burman family’s bid for Religare

The Burmans, who currently hold a 25 per cent stake in Religare, announced plans in September 2023 to acquire an additional 26 per cent stake for Rs 2,116 crore under Sebi’s Substantial Acquisition of Shares and Takeovers (SAST) guidelines. If completed, this would push their stake beyond 50 per cent, granting majority control of the New Delhi-based non-banking financial company (NBFC).

 

The open offer was triggered when the Burman family’s shareholding crossed 25 per cent, but the acquisition process requires multiple regulatory approvals due to Religare’s involvement in insurance and financial services. While the RBI has given its nod, approvals from Sebi are still awaited. The Competition Commission of India (CCI) and the Insurance Regulatory and Development Authority of India (Irdai) have already cleared the proposal.

Valuation challenges

Objections have been raised by Religare’s management, with Executive Chairperson Rashmi Saluja questioning the valuation of the open offer. Saluja has stated that the offer price of Rs 235 per share undervalues the company, calling for a fair price of at least Rs 300 per share.

 

The Burman family’s investment in Religare began in 2018 with the acquisition of warrants equivalent to a 10 per cent stake. Over time, their holding increased to over 25 per cent, triggering the Sebi-mandated open offer in September 2023. The acquisition is being routed through entities such as Puran Associates, Vic Enterprises, MB Finmart, and Milky Investment & Trading Company.

Awaiting final approvals

If completed, the acquisition could potentially end the ongoing battle for control of Religare. However, with Sebi approval still pending and the RBI stressing management continuity, the process remains complex. In July, the Securities Appellate Tribunal (SAT) directed Religare to secure all necessary regulatory approvals to facilitate the Burman family’s open offer.