Burman family raises stake in Religare Enterprises past key 25% threshold

Before this, the four entities of the Burman family held around 21.18%.

Crossing the 25% mark is significant as it gives the Burmans a say in every major decision; special resolutions that require 75% of shareholder approval will need approval from the Burman family.

Also Read: Burmans get CCI approval to buy stake in Religare

Under the Securities and Exchange Board of India’s (Sebi) takeover rules, shares purchased during an open offer period go into an escrow account, and the acquirer will be able to exercise voting rights on them only after the offer ends. Hence, the Burmans, who made an open offer for Religare on 25 September, will get voting rights for Wednesday’s purchase only once its offer is concluded.

“They (Burmans) needed Competition Commission of India (CCI) approval to acquire this tranche, which came in last week,” one person with knowledge of the transaction said. The CCI cleared the Burmans’ offer on 23 January, and on Wednesday, the Burman entities acquired additional shares at around ₹233.98, amounting to around ₹309 crore.

“Any resolutions on capital structure changes, compensation increases and Esops (employee stock options) or even reappointment of independent directors will require Burman approval,” said Shriram Subramanian, founder of Ingovern Research Services.

This is significant as the Religare board and its chairperson Rashmi Saluja have faced criticism from the Burmans over compensation and stock options. Religare has no shareholder representation on its board.

Religare shares rose 4.74% on Wednesday to close at ₹237.6 on the National Stock Exchange, while the benchmark Nifty index rose 0.95%. The Burmans’ open offer price for Religare is ₹235 per share.

The Burmans’ proposal to acquire Religare still requires approval from the Reserve Bank of India, the Insurance Regulatory and Development Authority of India and Sebi, before the open offer can proceed.

“We are happy to inform that we have increased our stake to 25.18% in Religare Enterprises Ltd (REL). We reiterate our commitment towards the acquisition of REL. We now eagerly await the remaining approvals necessary to consummate the open offer and look forward to cooperation by the REL board,” Mohit Burman, member of the Burman family, said in a statement.

The Burmans, who are promoters of consumer goods company Dabur India Ltd, initially signalled their intention to acquire control of Religare on 25 September.

The Burman family owns shares in Religare Enterprises through MB Finmart, Puran Associates, VIC Enterprises, and Milky Investment and Trading Co., entities belonging to cousins Anand and Mohit Burman.

The family built up its shareholding over five years after acquiring an 9.9% stake in April 2018. They had increased their stake to 14% in June 2021 and then acquired an additional 7.5% in August 2023.

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Published: 31 Jan 2024, 08:31 PM IST