SEBI Rejects Danny Gaekwad’s Bid for Religare Open Offer
In a recent turn of events in the financial world, the Securities and Exchange Board of India (SEBI) has made a decision that has sent ripples through the market. US-based businessman Danny Gaekwad’s application for approval to present a competitive open offer for Religare Enterprises has been unequivocally rejected by the regulatory body. Gaekwad had put forth a bold proposal to acquire 55% of Religare’s outstanding share capital at a price of ₹275 per share, surpassing the existing open offer from the Burman family set at ₹235 per share.
The Supreme Court had previously granted Gaekwad permission to showcase his financial capability by depositing ₹600 crore in a Reserve Bank of India (RBI)-designated account by a specified deadline. Unfortunately, he failed to meet this requirement and neglected to pursue the necessary regulatory clearances essential for the open offer. SEBI’s whole-time member, Ashwani Bhatia, highlighted the lack of credible evidence regarding Gaekwad’s financial resources, deeming the application as insincere and merely a tactic to impede the open offer process.
The regulatory body emphasized that in the best interest of shareholders, granting an exemption under these circumstances would be ill-advised. A competing bid without solid financial footing could lead to significant market disruptions and a decline in investor trust, as per the SEBI order. Furthermore, SEBI questioned the role of Gaekwad’s merchant banker, PL Capital Markets, for failing to conduct adequate due diligence. During the hearing, it was evident that the merchant banker was unaware of Gaekwad’s financial standing and had not completed the necessary Know Your Customer (KYC) procedures before accepting the mandate.
Adding to the complexity of the situation, SEBI clarified that the public announcement date for the open offer was not as claimed by Gaekwad. The regulations stipulated that a competitive open offer could only be made within 15 working days from the date of Burman’s comprehensive public statement, which was issued on October 4, 2023, rather than the date provided by Gaekwad. The Burman family’s open offer came to a close recently, with only 0.26% of the total offer receiving bids, resulting in their total stake in Religare rising to 25.44%.
SEBI’s Stance on Market Integrity and Investor Confidence
SEBI’s decision to reject Danny Gaekwad’s bid for the Religare open offer underscores the regulator’s commitment to upholding market integrity and safeguarding investor confidence. By emphasizing the importance of financial credibility in such transactions, SEBI sends a clear message that frivolous attempts to disrupt market dynamics will not be tolerated. The regulatory body’s scrutiny of Gaekwad’s application and the subsequent implications for market stability serve as a cautionary tale for other potential bidders in similar scenarios.
Expert Insights on Regulatory Compliance and Due Diligence
Experts in the financial sector have highlighted the significance of regulatory compliance and thorough due diligence in open offer scenarios. The case of Danny Gaekwad’s failed bid for Religare serves as a poignant reminder of the critical role played by regulatory bodies in ensuring fair and transparent market practices. By holding market participants to stringent standards of financial credibility and procedural adherence, regulators like SEBI contribute to the overall health and trustworthiness of the financial ecosystem.
