Sebi directs resolution of investor woes on CIL IPO

The Securities and Exchange Board of India (Sebi) has written to lead managers and independent distributors of Coal India’s Initial Public Offering (IPO) to resolve investors’ complaints regarding non-allotment of shares.

Sources said the capital markets regulator has sent letters to all the six investment bankers that managed the IPO of Coal India. According to industry officials, Sebi collated data from the investment bankers and registrars and found around 10,000 legitimate retail applicants did not get shares in the IPO. Officials said this took place as they were not able to upload the investor forms due to technical glitches.

“We received the Sebi letter last week regarding retail investors of Coal India not getting allotment because of technical issues,” said Rajiv Deep Bajaj, vice chairman & managing director, Bajaj Capital. “We have been in touch with the investors directly and have informed Sebi.”

The market regulator had earlier directed these syndicate members – brokers and sub-brokers responsible for the IPO distribution – to compensate those applicants who did not receive a single share even after giving valid applications. The syndicate members have the responsibility of uploading the applicant details in the online bidding platform provided by the stock exchanges. The compensation, according to industry sources, was based on the listing price.

“While we have been working with Sebi on this issue since December, we received the letter last month. We are hopeful the matter will be resolved in the next 10-15 days. Till that time, we have been told not to hire those syndicate members,” said an investment banker, under condition of anonymity.

The Rs 15,200-crore IPO of Coal India was managed by six investment bankers — Citigroup, Deutsche Equities, DSP Merrill Lynch, Enam Securities, Kotak Mahindra Capital and Morgan Stanley India. The retail segment of the highly publicised public sector issue was subscribed 2.28 times. A total of 1.627 million applications were received within the retail portion.