Burman family gets CCI nod to buy additional stake in Religare Enterprises; stock jumps 5%

Shares of Religare Enterprises (REL) rallied nearly 5% in opening trade on Wednesday after the entities linked to the Burman family received the Competition Commission of India (CCI) approval to acquire additional stake in the company. The Burman family, which owns FMCG major Dabur India, has got the nod to acquire 5.27% stake in REL through open market transaction.

The Burman family is currently the single largest shareholder in REL and holds around 21% stake through its four group entities - M.B. Finmart Private Limited, Puran Associates Private Limited, VIC Enterprises Private Limited, and Milky Investment & Trading Company. 

Cheering the news, shares of Religare Enterprises gained as much as 5% to ₹228 on the BSE, while the market capitalisation rose to ₹7,490 crore. Early today, the stock opened higher at ₹222.95, after falling 3.3% in the previous session to settle at ₹217.05 level.

The REL share witnessed volatile trade in the last one year, with the share price hitting its 52-week low of ₹130 on March 6, 2023, while it touched its 52-week high of ₹280.3 on September 21, 2023. At the current market price, the stock trades nearly 19% lower than its 52-week high level and 75% higher than its 52-week low mark. In the last one year, the counter has gained 35%, while it climbed 36% in six months and 7% in the past one month.

As per the notification issued by the CCI, the regulator has also given a green signal for an open offer for up to 26% of the total expanded voting share capital of Religare by the four companies of the Burman group. Post these acquisitions, the Burman group will become the majority stakeholder in Religare Enterprises with 62.27% shareholdings.

“The acquirers are all systematically important non-deposit accepting non-banking financial companies (NBFCs) engaged primarily in the business of making investments in capital markets and providing secured and unsecured loans. The Acquirers are controlled by members of the Burman Family. The Burman Family has investments across various sectors such as home healthcare, restaurants, insurance, consumer goods, FMCG, etc,” the CCI notified on Tuesday.

In September last year, the Burman group-owned entities had proposed an open offer to acquire up to 26% equity stake in the diversified financial services group at a floor price of ₹235 per share, amounting to ₹2,116 crore, payable in cash. All four entities had jointly announced an open offer to acquire up to 90,042,541 fully paid-up equity shares of the Mumbai-based firm.

The Burman group plans to create a leading financial services platform through the acquisition of REL, which could encompass lending, broking and health insurance services. “The proposed transaction is in line with our vision to create a leading financial services platform that encompasses lending, broking and health insurance services. We are convinced that REL is the right platform and positioned for sustained success. With our guidance, REL will continue its journey to being one of India’s distinguished financial services platforms,” Anand C Burman, Chairman Emeritus, Dabur India, had said on the open offer.

REL, which has been facing financial distress, has been able to raise multiple rounds of capital amidst constrained market access from certain large investors such as ₹200 crore from Kedaara Group in Q1 FY21 for a 6.39% stake sale in subsidiary Care Health Insurance. Besides, it raised another ₹570 crore in Q2 FY’22 by preferential allotment of equity shares to existing shareholders like the Burman family, Ares SSG Capital, and certain new marquee investors.

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