SEBI Probes Ekadrisht Capital Amid Trafiksol IPO Controversy

India's SEBI has launched an investigation into Ekadrisht Capital, the lead manager for Trafiksol ITS Technologies' cancelled IPO, over alleged discrepancies. The probe focuses on the merchant banker's due diligence failures, and SEBI has ordered a full refund for affected investors.

The Securities and Exchange Board of India (SEBI) has launched an investigation into Ekadrisht Capital Private Limited, the sole book-running lead manager for the now-cancelled IPO of Trafiksol ITS Technologies Ltd. The regulator's move arises from significant concerns over alleged irregularities both in the IPO process and in the company's disclosures.

Headquartered in Mumbai, Ekadrisht Capital finds its role under scrutiny, particularly regarding the urgency to unlock investors' funds. SEBI's inquiry will assess whether the merchant banker failed in its due diligence obligations and its potential involvement in irregularities during the IPO proceedings. SEBI stated, "Other aspects of the investigation, including the Merchant Banker's role, are being addressed independently, given the critical urgency as investors' funds have been locked for over two months following the Interim Order."

Trafiksol ITS Technologies Ltd., a company in intelligent transportation systems and toll management, launched their IPO from September 10 to September 12, 2024, with shares priced between Rs 66-70 each. The offering, involving the issuance of 64.10 lakh shares, was oversubscribed by 345.65 times. Shares were credited to investors by September 16, 2024, and were set to list on September 17, 2024.

The IPO was subsequently cancelled after a complaint and investigation by the 'Small Investors Welfare Association,' which accused the company of issuing a dubious Rs 17.70 crore purchase order to a vendor with questionable financials. SEBI's investigation disclosed that Trafiksol ITS Technologies was involved with a sham entity and tried to conceal this when investigating its credentials.

SEBI's major findings outline three main concerns: diversion of funds through misleading objectives, financial misstatements, and concealment of material facts in the prospectus. SEBI has instructed Trafiksol to refund IPO proceeds to investors, with the Bombay Stock Exchange overseeing the process in coordination with the issue's bankers, to be completed within a week. (ANI)

(With inputs from agencies.)