Florida-based businessman Danny Gaekwad has written to the Board of Religare Enterprises Ltd (REL) conveying his intent to launch a competing provide to the Burman Group’s open provide, which opened on Monday.
The letter, obtained by REL on Monday, follows Gaekwad’s communication to SEBI Chairperson on Sunday, wherein he sought permission to waive sure statutory timelines underneath the Takeover Code. This exemption would allow him to launch a competing provide to amass a controlling 55 per cent stake in REL.
Critical participant
The letter to the REL Board reiterates the important thing factors of Gaekwad’s earlier communication to the SEBI Chief, whereas additionally revealing his readiness to nominate a service provider banker and open an escrow account as required underneath the Takeover Code, based on sources near the event. The letter emphasises that Gaekwad is a “critical participant” intent on buying a controlling stake in REL, they added.
The letter additionally highlighted the precise provision (Regulation 11(1) of SAST ) that explicitly supplied that SEBI does have the ability underneath legislation to grant exemption on statutory timelines within the curiosity of public shareholders.
Additionally, Gaekwad’s letter is known to have highlighted that Burman Group’s closing letter of provide is silent on the situations positioned by the Reserve Financial institution of India in its approval and that in future this will go towards the pursuits of public shareholders of REL if the Burman Group’s open provide have been to undergo with out competing provide.
Worth purchaser
In the meantime, Gaekwad on Monday instructed a TV Channel that he was a “worth purchaser” and that he feels REL shares are nonetheless undervalued on the inventory exchanges.
In the meantime, sources stated the competing provide worth of ₹275 per share trying to be provided by Gaekwad is evident vindication of the stance of the impartial administrators of REL that the Burman Group’s provide worth of ₹235 per share was on the decrease aspect.
Proxy advisory companies
Nonetheless, securities market specialists and proxy advisors have blended views on Gaekwad’s competing provide try with many saying that SEBI shouldn’t grant exemption from the set statutory timelines on this case.
They see this a giant litmus check for SEBI given the necessity for additional strengthening of ties between US and India submit Trump’s re-election and India’s eagerness to draw overseas direct funding from the US.
Amit Tandon, Founder and Managing Director, Institutional Investor Advisory Providers (IIAS), a proxy advisory agency, stated “To make sure that buyers belief in markets stays excessive, and that the integrity of the method is maintained, it will be significant that the regulators be certain that mandated timelines are adhered to. We’ve got seen the debilitating penalties of ad-hoc timelines in numerous insolvency instances: lenders have needed to face the prices of delays”
Shriram Subramanian, Founder& MD InGovern Analysis, a proxy advisory agency, stated this so-called competing provide by Danny Gaekwad’s affiliate agency lacks any credibility and genuineness.
“The entity is neither an FPI nor has any significant enterprise presence in India. One doesn’t know the antecedent of this Gaekwad entity, the supply of its funds and the final word beneficiary proprietor. That is simply one other ploy to derail the takeover provide by the Burman group. This try by Gaekwad raises extra questions because the Board and administration of Religare have been resisting a takeover by the Burman group,” Subramanian added.
“As a accountable market regulator SEBI can’t enable abrupt competing provides that defy all process and laws when an present open provide is to be launched by a reputable entity proudly owning 25 per cent shareholding.”
He stated that SEBI has many grounds to reject the provide made by the Gaekwad entity.
Firstly, any competing provide must be made inside 15 days of the general public announcement by the unique acquirer. On this case the announcement by the Burman household was made in October 2023. After that SEBI and different regulators intently scrutinised the provide after which authorized the provide by the Burman group. The Gaekwad entity had greater than a 12 months to make this competing provide.
Secondly, any competing provide must be made via a service provider banker and proof of funds. The Gaekwad entity has not adopted any course of and simply written a letter to the SEBI chairman. This exhibits the non-seriousness of the competing provide, and raises questions on credibility of the entity, supply of its funds and risk of efficiently finishing the competing provide.
Thirdly, the contours of the competing provide itself will not be recognized. If it seems to be a conditional provide with ‘minimal acceptance degree’ clause, it could derail the complete course of, which can finally lead to neither the Gaekwad entity finishing the takeover nor the Burman household being allowed to finish the takeover course of. “General, to be able to protect the integrity of capital markets and sanctity of its laws, SEBI can’t enable frivolous provides that defy timelines and procedures”, Subramanian added.
