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InGovern: Sebi must force Sterling & Wilson to give exit option to minority shareholders

InGovern: Sebi must force Sterling & Wilson to give exit option to minority shareholders

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  • Sterling & Wilson through its IPO had raised Rs 2,850 crore via an offer for sale or OFS route.
  • According to the note written by InGovern, the non-fulfilment of obligations by promoters has resulted in a loss of 60 percent in the investment value for all the IPO investors.
  • Sebi (ICDR) Regulations allow dissenting shareholders to be provided with an exit offer by the promoters, in the case where there is a change in the object of the issue/offer in the IPO prospectus.

Proxy advisory firm InGovern has asked the market regulator Securities and Exchange Board of India (Sebi) to force promoters of Sterling & Wilson to provide an exit offer to minority shareholders of the company.

This, as per the note written by InGovern, has to be done at a set price as per SEBI (ICDR) Regulations. The advisory from InGovern has come as it feels that Sterling & Wilson hasn’t honoured the objective stated in its initial public offer or IPO prospectus.

Sterling & Wilson through its IPO had raised Rs 2,850 crore via an offer for sale or OFS route. Out of Rs 2,850 crore raised, it stated that promoters will repay loans amounting to Rs 2,563 crore to Sterling & Wilson Solar within 90 days of listing.

However, Promoters Shapoorji Palonji Company and Khurshed Daruwala have only paid Rs 1,000 crore as of December 31, 2019, which is 133 days after listing.

According to the note written by InGovern, the non-fulfilment of obligations by promoters has resulted in a loss of 60 percent in the investment value for all the IPO investors as the stock price has fallen to Rs 310/share from the issue price of Rs 780/share.

Sebi (ICDR) Regulations allow dissenting shareholders to be provided with an exit offer by the promoters, in the case where there is a change in the object of the issue/offer in the IPO prospectus.

InGovern has stated that in the case of Sterling & Wilson, shareholders have suffered significant erosion in the value of their holdings solely due to non-utilisation of funds as per objects of offer of the IPO and hence Sebi must provide the shareholders of Sterling & Wison an offer to exit.

Shriram Subramanian, founder and managing director of InGovern, said, “Overall, a huge loss of reputation for the promoters of the Sterling & Wilson Solar, the Shapoorji Pallonji Group. With substantial – over Rs 1,700 crore, erosion of wealth of public minority shareholders, and loss of investor trust for a group that seemed to have a stellar reputation.”

“In order to redeem this reputation, the Shapoorji Pallonji Group should provide an exit option for public minority shareholders. This is a demand from minority shareholders and Sebi should force the promoters to provide an exit option for minority shareholders,” he added.

Source: cnbctv18
Anand Gupta Editor - EQ Int'l Media Network

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