The Burman family, known for their ownership of Dabur India, has been steadily increasing their presence in the financial services sector. With a net worth of $10 billion according to Forbes India Rich List, they currently hold a 26% stake in Religare Enterprises, making them the largest shareholders in the company. Their plan includes increasing their stake in Religare Enterprises to over 25%, which would trigger a mandatory open offer.
Mohit Burman, Chairman of Dabur India, expressed their commitment to enhancing shareholder value in Religare Enterprises, highlighting their 25-year presence in the financial services sector, which includes investments in various financial institutions. He also indicated their intention to further expand their insurance and broking businesses under the Religare umbrella.
This move places the Burman family in competition with conglomerates like Reliance Industries, which recently demerged Jio Financial Services and has ambitious plans in the financial sector. Established players such as Bajaj Finance, Tata Group, Aditya Birla Group, and the Shriram Group are also key competitors.
Industry analysts and financial experts view this as a strategic move to tap into the growing financial services sector in India. The country’s thriving economy has led to increased demand for loans and various financial services, including insurance, creating opportunities for companies like Bajaj Finance, Tata Capital, and Aditya Birla Capital to secure fresh funding.
Deepak Jasani, Head of Retail Research at HDFC Securities, suggests that the Burmans’ decision to raise their stake in Religare is a diversification strategy, as financial services offer visible earnings potential for the next 5-10 years. They are opting for inorganic growth rather than organic expansion.
The under-penetration of financial services in India presents significant growth prospects for large business conglomerates. G Chokkalingam, Founder of Equinomics Research & Advisory, emphasizes that the financial services sector in India has substantial room for expansion, considering its low penetration levels compared to developed countries.
In terms of retail loans, mortgage loans, insurance coverage, and mutual fund assets under management (AUM), India lags significantly behind countries like the US and the UK. The Burman family’s open offer for Religare Enterprises amounts to Rs 2,116 crore, and their acquisition of an additional 5.27% stake will require an investment of Rs 407 crore. They have also indicated their intention to appoint directors to the board and take control of the company, with the flexibility to implement changes in the management structure as determined by the board.