Religare, which is locked in a battle with the Burman family, initially did not act on the proposal, but applied to the Insurance Regulatory and Development Authority of India (Irdai) after the Securities Appellate Tribunal (SAT) stepped in. Irdai was approached since Religare runs the insurance company Care Health Insurance.
“Irdai does not have any objection to this since the effective shareholding in Care Health Insurance Ltd does not change,” a person aware of the matter said on the condition of anonymity. Irdai also asked Religare to approach the Reserve Bank of India (RBI) for approval, the person said, since Religare is an non-banking financial company (NBFC) under RBI oversight.
With the Competition Commission of India (CCI) already approving the proposal, the deal now needs clearance from RBI and the Securities and Exchange Board of India (Sebi) before Burmans can make an open offer for Religare.
After initially welcoming the Burmans’ proposal last year, Religare had pushed back, stating the open offer price was too low. The matter has since deteriorated into allegations and counter-allegations, including charges of hefty stock options granted to Religare chief Rashmi Saluja, and Burmans’ fit and proper status.
A Religare spokesperson confirmed the Irdai communication.
According to the spokesperson, in response to its application, Irdai said, “…we have taken note of your submission and have no objection for the proposed open offer pertaining to the shares of REL subject to the insurer, promoter(s), transferor and transferees obtaining all the necessary approvals from other statutory/regulatory/ judicial bodies as may be required.”
Religare owns 63% in Care Health Insurance, which is regulated by Irdai. Religare’s ownership of Care will remain unchanged even after the Burmans’ open offer.
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“Insofar as CHIL (Care Health) application, Irdai has advised that the open offer does not involve any transfer of shares of CHIL. Accordingly, the provisions regarding register of transfer of shares of insurer under Section 6A(4)(b) of the Insurance Act, 1938 are not attracted,” said the Religare spokesperson.
“It can be seen from the above that while conveying no objection to the proposed open offer, the same is subject to all necessary approvals from other statutory/regulatory/judicial bodies as may be required,” said the Religare spokesperson.
Care Health, Religare’s cash cow, is India’s second largest standalone health insurance firm. A 2022 rights issue valued it at least ₹10,000 crore, at a price of ₹110 per share.
The person cited earlier said Irdai conveyed its no-objection a few weeks ago without attaching any conditions for Religare or the Burman family.
Emails sent to Irdai and Care Health remained unanswered.
Care Health, Religare’s cash cow, is India’s second largest standalone health insurance firm. A 2022 rights issue valued it at least ₹10,000 crore, at a price of ₹110 per share.
The Religare spokesperson said that as per Section 6A of Insurance Act, with regards to holding of shares indirectly by shareholders of a public company (Religare), a regulatory application for prior approval for transfer of shares was made in case of CHIL. Irdai has told Religare that in this case, as such, the submission of the application for “transfer of shares” is not required, said the spokesperson.
In September 2023, the Burman family, which owns 25% in Religare, expressed its plan to take over Religare via an open offer through four of its associate entities—VIC Enterprises Pvt. Ltd, M.B. Finmart Pvt. Ltd, Puran Associates Pvt. Ltd and Milky Investment and Trading Co. The Burmans’ majority stake purchase in Religare will cost at least ₹3,400 crore. The Burmans have announced the open offer at ₹235 per share, which alone will cost ₹2,116 crore if the issue gets fully subscribed when launched.
The Religare spokesperson said, “The acquirers had indicated that the prior approval of Irdai was not required for the proposed transaction as there is no transfer of shares of Care Health or MIC Insurance Web Aggregators and that they have made the relevant submissions to IRDAI and Sebi in this regard, but furnished the details for filing the application in case REL preferred to file an application.”
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Ever since the Burman family announced the takeover, Care Health and the stock options it doled out to Saluja, have been the central point of the tussle between the Burmans and Saluja, who is also the non-executive chairperson of Care Health.
After the Religare board opposed the proposed takeover, the Burmans alleged that Saluja had received unusually bulky stock options from Care Health, despite Irdai’s disapproval.
In a June letter, Care Health wrote to the insurance regulator stating that Irdai’s approval was not “not required” for granting the Esops. The letter was in response to a 14 June show-cause notice by Irdai asking why Care Health should not be penalized for granting Esops to Saluja despite the regulator’s rejection.
In June, Sebi criticized the board of Religare for delaying the open offer and directed it to submit its application without further delay. Religare challenged it before SAT, which directed the former to file the application on Burman family’s proposed acquisition.
Later, Irdai cancelled Saluja’s Esops worth around ₹250 crore, which too has been challenged by the group before the SAT.
If the open offer goes through, the Burman family will effectively become the owners of Care Health too.
Separately, Religare said in a regulatory filing that RBI has refused approval for appointing former Delhi Police Commissioner Rakesh Asthaana on its board. The company said RBI rejected the proposal on 15 May this year, but due to its busy schedule caused by the proposed takeover, it missed making this disclosure mandatory under listing norms.
Religare said it was also considering an option to ask RBI to reconsider its decision, but could not disclose this plan either, since it was “busy” preparing for the “herculean task” of making multiple applications to regulators with regards to the takeover. “In this rush and with the focus shifting on filing regulatory applications etc. the issue of refusal of approval by RBI for appointment of Asthaana being taken up with RBI for redressal/reconsideration got missed and in this state of events, the fact of not making the disclosure under Sebi LODR was also missed due to oversight,” added Religare.
And read | Burmans seek Saluja ouster from Care Health ahead of today’s AGM
