Overview

The Burman family, who own Dabur, has formally assumed control of Religare Enterprises Ltd (REL), a financial services company based in Delhi, as its new promoter following a contentious 18-month legal struggle. According to those with knowledge of the strategy, the Burmans are now anticipated to invest in the company and select a new management group in order to transform Religare into a competitive non-banking financial corporation (NBFC).

Fresh fund infusion

The primary operations of REL are retail brokerage (Religare brokerage), health insurance (Care Health Insurance), and loan (Religare Finvest).  Religare Finvest was taken out of the Central Fraud Registry database last year by State Bank of India, one of its lenders.

By purchasing preferential shares, the Burman family is likely going to contribute ₹2,000 crore, which was originally intended for the open offer, bringing their ownership interest to more than 50%. Further, the new promoters are also anticipated to carry out a rebranding effort, which might involve renaming the business and its subsidiaries in the upcoming months to conform to the Burmans’ strategic vision.

New Vision for REL

The company’s top priorities right now lie with stability, strengthened governance, and sustainable growth. Governance, integrity, and trust will continue to be important as REL moves toward a future characterized by resilience and stakeholder value maximization. Additionally, the Burman Group will collaborate with REL’s board and leadership to strengthen long-term value development and reaffirm the company’s strategic direction.

The Takeover Battle

After gaining a 25 percent interest in Religare, the Burmans made an open offer to purchase an additional 26 percent, sparking the start of the takeover struggle.  However, the offer was rejected by the senior management, which was led by Rashmi Saluja. They claimed that the firm was overvalued at Rs 235 per share. The former board also questioned if the Burmans satisfied the regulators’ “fit and proper” requirements in a letter to the authorities.  According to the Burman family, they successfully run insurance companies and an NBFC, so they satisfy all requirements.

Open Offer gets muted response

There was not much participation in the Burman family’s open offer; only 0.07% (2,31,025 shares) of the offered equity was tendered. But before the offer, the family already owned 21.10% of Religare Enterprises, and after the offer was over, that ownership grew to 25.16% (8,32,01,819 equity shares). Open market transactions on January 31, 2024, where they obtained roughly a 3.99% interest (1,32,00,000 equity shares), had already reinforced their position. M.B. Finmart Private Limited (MFPL), Puran Associates Private Limited (PAPL), VIC Enterprises Private Limited (VIC), and Milky Investment & Trading Company (MITC), all controlled by the Burman family, were used to make these acquisitions.

Religare’s recent performance

Religare Enterprises is a multifaceted financial services organization that operates in three different industries. Through its operating businesses and underlying subsidiaries, it provides a comprehensive range of financial services, such as retail broking, affordable home finance, health insurance, and loans to SMEs.

In comparison to the net profit of Rs 19.50 crore in Q3 of 2023, Religare Enterprises reported a net loss of Rs 43.08 crore in Q3 of 2024. In Q3 of 2024, total income reached Rs 1,670.24 crore, an 8.65% year-over-year increase.

Share Price Hike

While staying on a green course, Religare’s shares have fluctuated. The company’s shares surged by more than 8% in the early hours of Friday’s trading day. Since then, there have been ups and downs, with the gains falling to 2%.

The opening price of the stock was Rs 240.00, which was more than the closing price of Rs 223.01 per share the day before. The firm shares jumped, with the value increase standing at 4.79 percent, or Rs 10.69, after a series of ups and downs that seemed to be on the rise until lunchtime. As a result, each share of the corporation was worth Rs 233.70. Religare Enterprises’ stock ended the day at Rs 265.30, up 18.97% on the BSE.

Conclusion

The Burmans have successfully taken over Religare Enterprises thanks to these calculated acquisitions. Investor faith in the Burman family’s leadership is reflected in the share price spike. A lengthy disagreement between US-based investor Danny Gaekwad and outgoing chairperson Rashmi Saluja has come to an end with this takeover.

The image added is for representation purposes only