Gaekwad vs Burman Family: Why Religare is at the Centre of Investors' Battle

Just when the storm seemed to have settled for the Burman family in their bid to acquire an additional 26 per cent stake in Religare Enterprises, a foreign current has stirred things up again. A proposal for a counteroffer by Indian-origin US businessman Digvijay “Danny” Gaekwad to acquire a 55 per cent stake in the financial services company has now sparked competition in the stake acquisition battle. 

Gaekwad initially submitted a proposal with the securities and exchange board of India (Sebi) to acquire a 26 per cent stake but later updated it to 55 per cent to outbid Burman family’s post-offer shareholding with a 17 per cent premium on share. Gaekwad’s bid will offer Rs 275 per share as compared to the Burman family’s Rs 235 per share. 

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“Our proposed competing open offer will be for 55 per cent of the outstanding equity share capital of REL in compliance with Regulation 20(2) of the SAST Regulations,” said Gaekwad in a letter addressed to Sebi. If the proposed counter bid by Danny Gaekwad Developments & Investments Florida is accepted, its shareholding of 55 per cent in REL will be greater than the proposed post-offer shareholding of the Burman Family of around 53.95 per cent, he added. 

If Sebi accepts Gaekwad’s proposal, he can then make a counteroffer to the Religare Enterprises. However, according to Sebi’s rules, a counteroffer has to be made within 15 days of the public statement about an open offer by the original acquirer or within 20 days under section 20 of the SAST regulations. 

Investors Clash over Religare Sale 

The Burman family, promoters of the Dabur Group, has spent months fighting with the Rashmi Saluja-led Religare Enterprises over stake acquisition and getting all regulatory approvals. Now accusations made by Gaekwad have added new troubles and sparked a new war of words. Gaekwad argued that Burman’s offer undervalues the real worth Religare and highlighted how it hurts public shareholders’ interests. The US-based businessman also called out the Burman family’s failure to disclose how it plans to comply with the Reserve Bank of India’s (RBI) compulsory condition on consolidation of non-banking financial companies (NBFCs) within the Religare and Burman Groups and its subsequent impact on shareholders. 

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The Burman family countered Gaekwad’s accusations with fresh allegations over the authenticity of the counteroffer made by the US-based investor and his failure to comply with Sebi’s regulations regarding the timeframe to make a counter bid. In a statement the Burman family mentioned Gaekwad’s proposal lacks both substance and legitimacy. 

“Gaekwad had to make the competing offer, if at all, within 15 days from the date of public statement, which was made by the Burman Group on October 4, 2023, but he did not do so. Over 400 days have now elapsed for entitling anyone to make a valid competing open,” said Burman Family’s spokesperson in a statement.

What's Attracting Investors?

Founded in the early 1980s, Religare Enterprises (REL) has a long legacy as one of the oldest financial services companies in India, with diverse offerings including loans, health insurance and retail broking. The company’s strong performance in terms of earnings has attracted investors’ attention. REL reported a 70 per cent jump in consolidated net profit to Rs 68.49 crore for the second quarter of FY25 from Rs 40.35 crore in Q2 FY24. 

On an annual basis, the shares of the company have delivered a return of over 8.27 per cent on the national stock exchange (NSE). 

Who is Digvijay ‘Danny’ Gaekwad? 

Digvijay Danny Gaekwad is a first-generation entrepreneur, and his business empire is spread out across sectors like real estate, retail, hospitality, IT and financial services. Danny Gaekwad Developments & Investments Florida, through which he made a counter bid proposal, is his flagship that focuses primarily on the real estate sector. 

“He is a first-generation American...and is the founder-CEO and NDS USA, an IT & Cloud Services company, and the founder of Danny G Management, which owns and operates various restaurants and hotels,” his company’s website stated. 

He serves as a trustee on the University of Central Florida’s board. Additionally, according to the ministry of corporate affairs’ records, Gaekwad is a director of Little Flower Educational Institution. 

Apart from cementing business bases in the US, Gaekwad is also politically well connected. He is a leader of the Indian American community in Florida and has been a Republican supporter since the time of former US President George W Bush.  

“He makes sure we have good government. Danny wants everyone to have a chance to live the American Dream in this country,” said Rick Scott, US senator from Florida, according to Gaekwad’s website.