BackBurman family moves to take control of Religare Enterprises
The family placed an order to buy an additional 5.27% stake in Religare at ₹235 per share
PremiumMumbai: The Burman family, Religare Enterprises’ largest shareholder, is boosting its stake in the financial services company with the aim of taking control of the firm.
The family, which controls packaged goods company Dabur Ltd, has offered to acquire an additional 5.27% stake in the financial services company for ₹407 crore, leading to a mandatory open offer to buy an extra 26% stake from the public.
The financial services company currently does not have a promoter and is run by professionals. Religare Enterprises was earlier controlled by disgraced brothers, Malvinder and Shivinder Singh. They were arrested in 2018 for alleged financial irregularities at Religare Enterprises and its unit, Religare Finvest.
The Burman family currently owns around 21% of Religare Enterprises through MB Finmart, Puran Associates, VIC Enterprises, and Milky Investment and Trading Co.—entities belonging to cousins Anand and Mohit Burman.
On Monday, the entities told the exchanges that they had placed an order with a broker to acquire a 5.27% stake at ₹235 per share, a discount compared with the previous day’s closing price of ₹275 per share. This triggered a more than 7% decline in Religare Enterprises shares, which closed at ₹253.15 per share on Monday.
The deal is still open, but the Burman family’s intent to accumulate over 25% of Religare Enterprises has triggered an open offer. Securities Exchange Board of India (Sebi) rules require an entity buying a 25% stake in a company to mandatorily offer to buy an additional 26% stake from the public.
The Burman family’s open offer for Religare Enterprises, on full acceptance, will amount to ₹2,116 crore.
Anand C. Burman, chairman emeritus of Dabur India, said the deal was in line with the family’s vision to “create a leading financial services platform that encompasses lending, broking and health insurance".
The company also said the family will appoint directors to the board and assume control and reserves the right to implement changes in the management structure as determined by the board, according to the exchange filing.
In response, Religare Enterprises said the Burman family’s intent of acquisition is a “positive step".
“We view this intention of acquisition of control in the company as a positive step reflective of the strong business platform on which the company stands. We are confident that this step will be a catalyst in strengthening the position of the company, which shall continue to achieve greater heights in the industry under the leadership and control of the acquirers. We express our wholehearted support in this step of the acquirers," the company said in a statement Monday.
The completion of the offer is subject to the procurement of applicable statutory approvals.
“During such open offer period, the acquirers shall have the option to appoint their nominee director, in accordance with Sebi SAST (Securities and Exchange Board of India’s Substantial Acquisition of Shares and Takeovers)," Religare added.
“The board believes that this corporate action is a testimony of the excellent work done by the board and management and is going to catalyze the next phase of growth of the company," Religare Enterprises said in a filing to the exchanges Monday.
The Burman family has been building its position in Religare Enterprises over time. It had accumulated a 14% stake in the business in 2022. In August, it added an additional 7% stake. In August, Mohit Burman, the vice chairman of Dabur Ltd, said that the family’s investment in Religare Enterprises was a financial investment.
JM Financial is the financial adviser and the manager of the open offer.
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