The Securities and Exchange Board of India (Sebi) has rejected an application by US-based businessman Danny Gaekwad, who had sought the regulator’s approval to place a competing open offer for Religare Enterprises.
Gaekwad had sought an exemption to propose an offer at ₹275 per share to acquire 55 per cent of Religare’s outstanding share capital, which surpassed the Burman family’s existing open offer priced at ₹235 per share.
Following which, the Supreme Court had permitted Gaekwad to deposit ₹600 crore in a Reserve Bank of India (RBI)-designated account by 2pm on February 13 to demonstrate his financial capability. However, he failed to deposit and also did not apply for the necessary regulatory approvals for the open offer.
“In the absence of adequate proof of financial resources, the application does not appear to be bona fide. It seems frivolous and aimed solely at hindering the open offer process,” Sebi whole-time member Ashwani Bhatia said in the order.
The market regulator said that in this situation, granting the exemption would not be in the interest of shareholders. Further, a competing offer, which is not backed by financial capability, would disrupt market dynamics and erode investor confidence, the order said.
Additionally, Sebi called Gaekwad’s merchant banker PL Capital Markets’ role in question for conducting inadequate due diligence. During Friday’s hearing, the merchant banker appeared clueless about Gaekwad’s financial credentials and was found to have not done the proper due diligence and KYC before accepting the mandate, the order said.
Sebi also clarified that the public announcement date for the open offer was September 25, 2023, not January 18, 2025, as stated by Gaekwad. As per the regulations, a competing open offer could only be made within 15 working days from the date of Burman’s detailed public statement, which was October 4, 2023.
The Burmans’ open offer concluded on Thursday with only 0.26 per cent of the total offer receiving bids, bringing its total holding in Religare to 25.44 per cent.