Court proceedings won't affect IHC's investment plans: Sammaan MD & CEO

Samman Capital CEO Gagan Banga says IHC's proposed $1 billion investment remains fully intact despite ongoing court proceedings, with regulatory approvals progressing

The proposed $1 billion investment by Abu Dhabi-based International Holding Company (IHC) in Sammaan Capital for over 43 per cent stake in the lender will not be affected by the ongoing court proceedings against the company, said Gagan Banga, managing director and chief executive officer (MD&CEO) of Sammaan Capital, in an interaction with Business Standard on Thursday.

 

Explaining his optimism, he said that the investor was informed about the case during the due-diligence process, and all potential upsides and downsides were discussed before moving ahead with the finalisation of the investment.

 

“During the due diligence, it was already in play, and it was also not something that happened many years ago. Therefore, it was not in the trunk of things but in the current flow of things. This was very much in the current flow of things discussed — downsides, upsides, all understood — and then we moved ahead,” said Banga, adding that this (court proceedings) is in no way going to adversely impact the transaction.

 

“If at all they have only understood the challenges better: why a promoter is required and so on. And that's always good for me because now they understand the kind of value that they can bring, and the value creation that can happen,” he said.

 

In October, Sammaan Capital said a unit of IHC has entered into an agreement to invest nearly $1 billion (₹8,850 crore) for a 43.46 per cent stake in the non-banking financial company (NBFC), subject to regulatory approvals. Following this, IHC has the option to up its stake to over 60 per cent through an open offer. IHC will be classified as the promoter of Sammaan Capital on the fructification of the deal.

 

Banga said the current court proceedings will also not have a bearing on the regulatory approval process as well. Commenting on how long the regulatory approval process will take, he said: “I think we should be able to get it done in six months. We are now one and a half months into the transaction. Two approvals have come, I believe the third will come in the next 15 days, and the fourth will take another four months.”

 

Shareholders and stock exchanges have given their approvals to the transaction. The approval from the Competition Commission of India (CCI) is expected in some time while the nod from the Reserve Bank of India (RBI) could take another four months, Banga said.

 

The Supreme Court this week came down heavily on the Securities and Exchange Board of India (Sebi), the Central Bureau of Investigation (CBI), and the Ministry of Corporate Affairs (MCA) for what it called a “passive approach” in probing allegations against Indiabulls Housing Finance Ltd (IHFL), which is now Sammaan Capital.

 

The case arises from a petition filed by Citizens Whistle Blower Forum, a non-governmental organisation (NGO), seeking a special investigation team (SIT) probe into alleged irregularities committed by the company. The NGO’s petition alleges that loans were extended by IHFL to companies that routed the money back to firms promoted by IHFL’s erstwhile promoter Sameer Gehlaut.

 

“The proceedings centred around the petitioners’ submissions that the erstwhile promoter has fled the country, settled in London, and acquired various 5-Star hotels, aircraft, yachts, etc., and an investigation is warranted,” the lender said in a statement, adding that the apex court made it abundantly clear that it has made no negative observations against Sammaan Capital’s conduct, specifically clarifying that “we have not expressed any opinion against Sammaan Capital Limited”.

 

The company is today a promoter-less, board-run, professionally managed, diversely held financial institution, with over 400,000 shareholders, it said, adding that the thrust of the case now is solely on the erstwhile promoter, and quid pro quo, if any, between the five borrower groups.

 

The loan accounts of all the five borrower groups are “nil” as on date, with majority of them repaying fully way back in 2019 itself, the lender said.

 

On how the current court proceedings will impact the lender’s day-to-day functioning, Banga said: “We have been living with this for six years now; it's not a new thing. Yes, we have survived, we have grown, we have thrived, we have navigated — we have done all of that through the last six years. In the initial stage, there were these allegations and it was us; now the world has certified that these allegations hold no merit.”

 

“So, obviously, while it is irritating, having already gotten the validation of so many agencies, it's business as usual for the company,” Banga said.

 

Recently, Sammaan Capital announced an offer of purchase for its non-convertible debentures (NCDs) as part of its ongoing efforts to strengthen liquidity and maintain a balanced asset-liability profile. The company said its asset liability management committee (ALCO) has approved the purchase of NCDs maturing up to June 30, 2026, at par value through exchange transactions. The repurchased debentures will be held as treasury stock until maturity.