Comments
Market regulator Securities and Exchange Board of India (SEBI) is set to initiate proceedings by sending a show-cause notice to ICICI Prudential Asset Management Company over its investments in the initial public offering (IPO) of its sister concern, ICICI Securities.
The move follows a recent letter by SEBI advising the country’s largest mutual fund (MF) house to refund about ₹240 crore it had invested on the last day of the IPO of ICICI Securities, along with a 15 per cent interest to its five schemes.
“SEBI has taken this issue very seriously. It is of the opinion that this is a matter of governance and ethics,” said a person familiar with the development.
ICICI Securities had, in March this year, launched its IPO of 7.72 crore equity shares to raise a little over ₹4,000 crore.
ICICI Prudential AMC applied for and was allotted about 1.23 crore shares with an investment of ₹640 crore under five of its schemes.
Of this amount, ₹400 crore was applied for on the first day of the IPO, and the balance ₹240 crore on the last day.
SEBI is of the opinion that the investments on the last day were of a “last-minute” nature to bail out the IPO. It is likely to begin investigations and seek comments from the company officials on the issue, though the full process could take some time.
ICICI Pru defends investment
However, an official spokesperson of ICICI Prudential AMC said that all investments are carried out in line with the regulatory guidelines and established processes.
“The investment in ICICI Securities IPO is consistent with the investments made by us in the past, and there has been no deviation from the typical investment pattern which we follow. We are engaging with SEBI to address the matter to their satisfaction, and we remain fully committed to investors’ interest,” it said in response to an e-mail questionnaire sent by BusinessLine.
Though ICICI Prudential AMC did not respond to specific queries on the refund process and its impact on investors, experts said this will also have to be looked into.
“The exact method of refunding the money and how it will sell its shares without impacting the investment of the investors in the MF scheme is an issue that will have to be seen,” said an expert, who did not wish to be named on company-specific issues.
On July 27, the ICICI Securities scrip closed at ₹315.30 apiece on the Bombay Stock Exchange, much below its issue price of ₹520 apiece.
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.