The board of financial services company, Religare Enterprises, plans to approach the Securities and Exchange Board of India (Sebi) and the Reserve Bank of India (RBI) with fresh valuation reports from two independent advisory firms, as it believes that the open offer price being offers by the Burmans of Dabur is below fair value.
A source close to the development said the company’s trajectory has been up since 2018, and this is the first time that the share price has gone down from Rs 280 to Rs 230. “We are going to create two valuation reports and that will go to exchanges and regulators,” the source said.
This comes close on the heels of the Burman family making an open offer for acquiring an additional 26% stake in Religare on September 25. The four entities — Puran Associates, Vic Enterprises, MB Finmart and Mikly Investment & Trading Company — belonging to the Burman family already have 21% in Religare Enterprises and the open offer was triggered once it decided to acquire 5% in the company.
According to the offer document, the Burmans intend to acquire more than 90 million shares at Rs 235 per share, at a discount of 13.5% to the previous day’s market closing hour share price. The share price has been on the decline and currently trades at Rs 234 — lower than the open offer price. Religare Enterprises’ market cap fell by Rs 1,186 crore or 13.5% to Rs 7,610 crore on 12 October from Rs 8,796 crore on 24 September.
“We crossed $1 billion mark and unfortunately you drop the share price to Rs 230 by doing an open offer. Basically you are killing the sentiments of market and also sentiments of smaller shareholders,” the source said.
The Burman family had earlier acquired a 7.6% stake in Religare for Rs 534 crore through open market transactions in August.
Religare Finvest had underwent a management change after its former promoters Shivinder Singh and his brother Malvinder Singh allegedly engaged in financial misappropriation of funds, among other illegal activities. The official quoted above says when the new management took over in 2018, the company’s share price was just Rs 17 and it went to touch a high of Rs 300.
Further, Religare Enterprises will also file 3-4 more FIRs with investigative agencies against the former promoters on charges of fraud in corporate loans, against shell companies of Singh brothers and siphoning of funds.
“We have been chasing all investigative agencies, and the enforcement directorate has also attached almost Rs 2,000 crore based on our complaints,” the official said.
According to the official, irrespective of any change in management, Religare Enterprises will continue to deliver on its public commitments which includes a qualified institutional placement of up to Rs 700 crore and IPO of Religare Broking in next 2 years.
The NBFC arm of Religare Enterprise–Religare Finvest–which continues to be under the Reserve Bank of India’s stringent prompt corrective action (PCA) norms, will likely exit the framework in the next financial quarter as the official said a recent inspection of Religare Finvest by the regulator was “very successful