Companies

InGovern seeks exit route for minority shareholders of Sterling and Wilson

PALAK SHAH Mumbai | Updated on January 11, 2020 Published on January 09, 2020

The promoters of SWSL had raised ₹2,800 crore in August 2019 for re-payment of debt but could not fulfil the promise made to shareholders

Shareholder proxy advisory firm InGovern has sought an open-offer exit for minority shareholders of Sterling and Wilson Solar Ltd (SWSL) for the failure of the promoters to keep the promise they made in the IPO documents.

The promoters of SWSL had raised ₹2,800 crore in August 2019 for re-payment of debt but could not fulfil the promise made to shareholders in the IPO prospectus within the stated deadline. InGovern on Thursday said that this non-fulfilment of obligation by the promoters, as promised in the offer document, tantamounts to change of the objects and that an exit opportunity should be provided to the minority shareholders.

On Thursday, InGovern released its report, ‘Solar Eclipse for Minority Public Shareholders of a Solar EPC Company’.

According to InGovern, while the objects of SWSL IPO were to enable the promoters to repay loans of ₹2,563 crore to SW SOLAR within 90 days of listing, the company received only ₹1,000 crore on December 31, 2019, that is, 133 days after listing. This non-fulfilment of obligations by the promoters, per the objects of the offer, has resulted in a loss of over 60 per cent in the investment value for IPO investors, as the stock price has fallen from the issue price of ₹780 to ₹310 as on January 6, 2020, resulting in a loss of ₹1,700 crore for public minority shareholders, InGovern said.

 

 

Read: Sterling and WilsonSolar hit back at proxy advisory firm InGovern

InGovern founder and MD Shriram Subramanian said: “Overall, a huge loss of reputation for the promoters of SW SOLAR, the SP (Shaporji Pallonji) group. With substantial — over ₹1,700 crore — erosion of wealth of public minority shareholders, and loss of investor trust for a group that seemed to have a stellar reputation.”

‘Malicious report’

Responding to the report, a spokesperson for the promoters of Sterling & Wilson termed it malicious, misleading and defamatory.

“As per the said report, the object of the offer was to enable the promoters to repay loans; however, factually, the objects of the offer was to provide liquidity to the shareholders along with the benefits of listing of the equity shares, including but not limited to enhancing visibility, brand image. The utilisation of proceeds was an added intent of the promoters and cannot be directly construed to be the object of the offer. The promoters would like to state that this intent is intact and is suitably demonstrated by facilitating repayment of ₹1,000 crore as committed by December 31, 2019,” the company said.

“We completely deny any misleading statements being made in the prospectus.”

Published on January 09, 2020
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