MUMBAI: In a setback to Digvijay Gaekwad‘s plans to make a competing offer for Religare Enterprises, the Securities and Exchange Board of India (Sebi) rejected his application on Friday, citing a lack of proof of financial resources and terming the application as frivolous.
In his application, Gaekwad, who is a Florida-based investor, had requested Sebi’s exemption from strict enforcement of regulation 20 of takeover rules by allowing him to make a competing offer to acquire 55% of Religare at Rs 275 per share.
Sebi said Gaekwad had “failed to demonstrate his ability to meet the financial obligation for making the competing open offer”. It also noted Gaekwad’s non-compliance with the Supreme Court order, stating that he had “failed to deposit Rs 600 crore, as directed by the Supreme Court, which would have shown his commitment towards making the offer”. The rejection of Gaekwad’s application removes a hurdle for the Burmans, the largest shareholders of Religare, who have been attempting to gain control of the company.
“In the absence of adequate proof of financial resources required for making the offer, the application does not appear to be bonafide,” Sebi said. It deemed the application frivolous and aimed at hindering the open offer process of the Burmans. As a result, it disposed of the application filed by Gaekwad. Friday’s order follows Religare’s announcement on the departure of its chairperson Rashmi Saluja from the company.
Shareholders had voted against her reappointment, resulting in the termination of her directorship.
The Burmans had made an open offer for an additional 26% stake in Religare at Rs 235 per share, but they only managed to acquire 0.26% in the open offer that closed on Thursday.