The Economic Times daily newspaper is available online now.

    Foul play behind skipping Religare offer: Sunil Godhwani

    Synopsis

    Mehta was appointed non-executive non-independent director of Religare Enterprises in February 2018.

    sunil-godhwani-bcclAgencies
    Godhwani further alleged that Mehta through India Horizon fund had bought 52.2 lakh shares of Religare Enterprises in 2013 at about Rs 352 per share. (File Photo)
    NEW DELHI: Sunil Godhwani, former CMD of Religare Enterprises (REL) has alleged that Siddharth Mehta of Bay Capital was in connivance with erstwhile promoters – siblings Malvinder Mohan Singh and Shivinder Mohan Singh — and Shyam Maheshwari of SSG Capital to acquire substantial stake in the company without giving a mandatory open offer as stipulated by market regulator Sebi.

    Bay Capital and its associate companies are significant minority shareholders of REL. Mehta was appointed non-executive non-independent director of Religare Enterprises in February 2018.

    Empower Your Corporate Journey with Strategic Skill Courses

    Offering CollegeCourseWebsite
    IIM KozhikodeIIMK Chief Product Officer ProgrammeVisit
    IIM LucknowIIML Chief Executive Officer ProgrammeVisit
    Indian School of BusinessISB Chief Technology OfficerVisit
    In a letter to the ministry of corporate affairs dated April 6, Godhwani alleged that Bay Capital, India Horizon Fund, IDBI Trustee Company, Resilient India Growth Fund (SSG group company), SSG Capital and others acquired more than 26% shareholding in REL in connivance, without an open offer.

    Religare Enterprises and its subsidiary Religare Finvest (RFL) had filed a complaint against the Singh brothers and Godhwani under the Companies Act with the ministry of corporate affairs in December 2018. It said RFL had sanctioned loans to companies known to the brothers but was never repaid. Loans stand at Rs 2,397 crore, with Rs 415 crore as interest to 19 entities.

    “It is apparent that the price was deliberately battered down to Rs 52.50 per share from a high of Rs 250 per share. And the said price was reached upon taking into account the aspect of corporate loan book (CLB) which stood at about Rs 2,300 crore) and the same was written off, as this was the money which was taken by the erstwhile promoters,” Godhwani alleged in his correspondence, copies of which was also sent to RBI and Sebi.

    ET has reviewed the reply.

    graph
    The market cap of REL at Rs 52.50 per share was Rs 800 crore when the embedded value was over Rs 3,000 crore. “Why and under what circumstances an open offer was prevented? This requires investigation by Sebi for insider trading and it will expose the entire nexus. The underlying value of asset is much more than the value of holding company, which explains the modus operandi between Siddharth Mehta and the erstwhile promoters,” Godhwani further writes.

    Godhwani further alleged that Mehta through India Horizon fund had bought 52.2 lakh shares of Religare Enterprises in 2013 at about Rs 352 per share. In September 2017, SSG Capital of Shyam Maheshwari invoked pledged over 17% equity shares of REL which were held by IDBI Trustee (custodian of SSG Capital), he added.

    In December 2017, IDBI Trustee sold the shares to Resilient India Growth Fund (part of SSG group), India Horizon Fund (part of Bay Capital) and Bay Capital Advisors. Even preferential warrants were issued to people known to Mehta. Hence, transactions that took place were being controlled by Mehta, who was acting in concert with erstwhile promoters Malvinder Mohan and Shivinder Mohan Singh and Shyam Maheshwari, Godhwani claims.

    The corporate loan book on the basis of which the complaints have sought an investigation were loans taken by erstwhile promoters directly argues Godhwani and said that the banking regulator and the company’s PE investors like Jacob Ballas and IFC Washington and even rating agencies like ICRA were kept in the loop.


    (You can now subscribe to our Economic Times WhatsApp channel)
    (Catch all the Business News, Breaking News, Budget 2024 News, Budget 2024 Live Coverage, Events and Latest News Updates on The Economic Times.)

    Download The Economic Times News App to get Daily Market Updates & Live Business News.

    Subscribe to The Economic Times Prime and read the ET ePaper online.

    ...more
    The Economic Times

    Stories you might be interested in