Sebi hits pause on HDFC AMC’S share sale
MUMBAI: The Securities and Exchange Board of India (Sebi) has put on hold the initial public offering (IPO) of HDFC Asset Management Co. Ltd, due to past violations, according to a filing on the regulator’s website.
“Sebi has sent a letter to lead manager Kotak Mahindra Bank that proceedings have been kept in abeyance for examination of past violations,” the regulator said on its website.
The regulator did not disclose the nature of these violations but its move could be due to a past front-running case.
Front-running is the practice of a broker or trader stepping in front of large orders to gain economic advantage.
In its draft red herring prospectus filed with Sebi, HDFC AMC said, “we are involved in an investigation initiated by Sebi with regard to alleged front-running and violation of securities laws”.
Calls and text messages sent to Millind Barve, managing director of HDFC AMC, the mutual fund arm of Housing Development Finance Corp. Ltd, did not elicit a response till press time.
This will likely push HDFC AMC’S ₹3,500 crore public offer- ing to at least the third quarter of the fiscal year. The fund house was earlier looking at June for the IPO.
“The investigation is still on-going and may take sometime to finish. Sebi’s investigation in the front running case case was three levels—one involved key officials of fund house, the second involved equities dealers who received privileged information, and the third involved intermediaries who made gains for themselves and in their client accounts,” said a person familiar with the developments, declining to be named.
Once the investigation is complete, Sebi will pass final orders. Only after that will the firm will get a green light for its IPO, he added.