Vaswani IPO investors to get withdrawal option

Retail investors and high net worth individuals (HNIs) who put in applications for the initial public offer (IPO) of Vaswani Industries will be given a withdrawal option before the shares are allowed to be listed on the bourses. The IPO has been in abeyance for more than two months due to a regulatory inquiry after massive withdrawals. Further, the regulator has barred Rikhav Securities from IPO-related activities till further directions.

In an order issued on Monday, the Securities and Exchange Board of India said, “Vaswani Industries Limited shall give the withdrawal option to all the investors who have been allotted shares in the non-institutional investors’ category and the retail individual investors’ category for such number of shares by which the allotment ratio was impacted due to withdrawals/rejections in the aforesaid categories.”

 

The withdrawal option shall be kept open for a period of 10 days, it adds.

If the company fails to provide a withdrawal option within the prescribed time frame, Ashika Capital (which acted as the book-running lead manager) will have to cancel the whole allotment and refund the entire money to investors “within seven days of such failure”.

On May 3, when the issue closed, the stock exchange website showed the offer was subscribed 4.16 times, with the institutional segment being subscribed 0.16 times.

The portions reserved for high net worth individuals and retail investors were subscribed 11.29 times and 6.82 times, respectively. Sebi investigations showed the issue was subscribed only 1.28 times after the withdrawals. The subscription in the HNI category fell to 0.84 times from 11.29 times earlier.

After withdrawals, if subscriptions fall below the minimum quantum mandated, Ashika Capital will have to “purchase or arrange purchase through any investor(s) identified by it of such number of shares as to ensure the subscription does not fall below the minimum level of subscription”.

The regulator has also barred Rikhav Securities from acting as a syndicate member/sub-syndicate member for all forthcoming issues till further directions. “The process of bidding in shares of the issuer company by Rikhav Securities prima facie indicates that the said stock broker has made attempts to abuse the bidding process. Therefore, till further directions, allowing it to act as a syndicate member/sub-syndicate member is clearly not in the interest of investors and the securities market in general,” explains the order. Sebi also directed Bajaj Consultants Pvt Ltd and some of its group entities to “cease and desist from bidding in an objectionable manner till further directions.” Sebi, meanwhile, will further “examine in detail the role of the intermediaries involved in the IPO of Vaswani Industries Limited”, said the 23-page order.