A proposal by the Mumbai-based Onelife Capital Advisor (OCAL) to buy Sahara group’s mutual fund business has come under a cloud due to its chequered past record with market regulator SEBI.

Exit direction

Sources close to the development told BusinessLine that OCAL, a financial advisory company, is a front-runner for Sahara’s MF business, but getting SEBI’s clearance could prove a major hurdle.

In 2015, SEBI had directed Sahara to exit from its mutual fund business after its sponsor and group Chairman Subrata Roy was declared “not fit and proper.” Sahara’s appeal against the SEBI order was rejected by the Supreme Court. SEBI had also rejected Sahara’s proposal to sell the mutual fund business to a non-existing asset management company.

In April, SEBI had directed Sahara to wind up its MF schemes, following which OCAL approached the Securities Appellate Tribunal (SAT) pleading that SEBI should consider its proposal to buy Sahara’s MF business before forcing a winding up. The tribunal then directed SEBI to reject or accept OCAL’s proposal on its merits.

OCAL’s many violations

According to sources familiar with the case, OCAL’s application has been with SEBI for the past few months; the market regulator is looking at the company’s record before allowing it to acquire Sahara’s mutual fund business. In 2014, SEBI had imposed a fine of ₹3.5 crore on OCAL, its promoters and directors for multiple violations of securities laws, including non-disclosure of certain important information in the IPO prospectus and diversion of funds. OCAL had raised ₹36.85 crore through its IPO in 2011. The regulator had also barred OCAL and its key director from the market for three years effective December 2011.

“Ideally, Sahara’s MF business should not be sold to OCAL purely based on its record, but SEBI may face legal hurdle in imposing a life-long ban on anyone,” said JN Gupta, former ED, SEBI.

E-mails sent to Sahara and OCAL remained unanswered.

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