KuberGrow Team Hero FinCorp and HDB Financial Services’ IPOs have been suspended by the Securities and Exchange Board of India (SEBI) on the grounds of potential regulatory complications. As Hero FinCorp has remained pending for nearly eight months, HDFC Bank’s subsidiary HDB Financial Services has also been pending for four months.
The deferment is due to fears regarding the issue of pre-IPO shares. Under the Companies Act, unlisted companies cannot have over 200 shareholders during a financial year or make private placements to more than 50 persons at one time. In case of privately placing shares to public investors within six months, it can be considered a public issue.
Both companies, however, have denied any wrongdoing. A spokesperson for HDB Financial Services stated that the company is simply awaiting SEBI’s final review and has adhered to all regulations. Similarly, Hero FinCorp insists it has stayed within the 200-investor limit.
The goal of Hero FinCorp’s July 31 IPO documents was to raise ₹3,668 crore, of which ₹2,100 crore would be used to increase its Tier-I capital for lending. A ₹12,500 crore initial public offering (IPO) comprising a ₹10,000 crore offer-for-sale by HDFC Bank and a ₹2,500 billion new issue was submitted by HDB Financial Services on November 5.
SEBI is yet to issue a conclusive verdict, putting both IPOs in limbo while investors and stakeholders eagerly wait for a clue on their listing dates.
