C2C Advanced Systems IPO sees 80% of individual investors withdraw bids

Nearly 80 per cent of individual investors withdrew bids from the initial public offering (IPO) of C2C Advanced Systems after the company’s listing was postponed due to regulatory concerns.

 

The Securities and Exchange Board of India (Sebi) had directed the company which specialises in the development of complex systems for defence, homeland security, and aerospace sectors to appoint independent auditors to evaluate its financial accounts. The regulator has also asked the National Stock Exchange (NSE) to establish a monitoring agency to oversee the utilisation of funds raised through the IPO.

 

After intimation from Sebi, investors were provided an option to withdraw their bids from the Rs 99 crore IPO. The window for withdrawing applications for all categories ended on Thursday.

 

From around 4.42 lakh applications received in the individual category, nearly 3.5 lakh were withdrawn. In the institutional investor category, seven applications were withdrawn, while the high net worth individual (HNI) category saw over 14,000 withdrawals.

 

The SME IPO had received a good response, seeing 100 times more demand than shares on offer. This is the second time when the market regulator has stepped in on concerns over the quality of SMEs before listing.

 

Earlier this year, BSE halted the listing of Trafiksol, a software provider for traffic systems, amid concern over the use of the issue proceeds and wrongful disclosures. In October, Sebi ordered a detailed probe into the disclosures made by Trafiksol in its offer documents. The proceeds from the IPO were moved to an escrow account with no access to Trafiksol.

 

The market regulator has proposed tighter norms for the listing of SMEs. They include enhanced eligibility conditions, increasing the minimum application value, lock-in requirements by promoters, tighter norms for migrating to the main board, and stricter corporate governance measures.

 

The move came after the regulator found instances of funds and IPO proceeds being allegedly diverted, circular transactions to related parties to inflate prices, and booking fictitious transactions to create positive sentiment among investors.