Sebi directs Vaswani Industries to refund IPO money

MUMBAI: Retail and high net worth investors, who had applied for the initial public offering of Vaswani Industries, will be refunded their money, with the capital market regulator Sebi directing the Ahmedabad-based company to provide a ‘withdrawal’ option.

“The issuer company, Vaswani Industries, shall give withdrawal option to all the investors who have been alloted 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/rejection in the aforesaid categories,” a Sebi order said. The regulator, on May 13, had withheld the listing of the company following hundreds of complaints from investors, alleging

large-scale withdrawal and rejections in the issue. The complainants alleged certain applications were submitted to artificially inflate the subscription in qualified institutional buyers and high net worth individual category to attract and mislead the investors.

Sebi’s analysis indicated that upon closure of the issue, certain applicants adopted various methods for withdrawing their bids such as giving stop payment instructions, amount invested exceeding the funding arrangement with the bank and ensuring their cheques were returned due to insufficient funds. As a result, 69.26% (almost 3 times of the issue size) of the total applications received were not considered for allotment. The one-crore share issue was subscribed to the extent of 4.16 times after removing multiple and duplicate bids and before technical rejections.