Indiabulls Ventures comes under Sebi lens over unusual share price rise

IVL's share price increased eight-fold in a period of six months

Indiabulls Ventures’ (IVL) unusual share price movement in the past six months has come under regulatory scanner.

According to sources, the stock exchanges have sought details of certain investors who traded in the scrip during the period.

The sharp rise in the share’s price after a preferential allotment to institutional investors between April and June, say the sources, generated red flags at the Securities and Exchange Board of India’s (Sebi’s) surveillance system.

The share price surged eightfold in these six months and trebled since April, ahead of the share allotment.

“The regulator recently met the surveillance teams of stock exchanges and directed them to collate information about the price movement. The exchanges were asked to file a report within a month,” said a regulatory official.

Accordingly, the exchanges have asked IVL for details of certain investors who transacted in the stock, along with their bank statements since the beginning of the year. And, to provide all the undertakings given by investors and the promoter group during the period.

The exchanges might tally the information with brokers’ records, to check if the investors or the promoter made the needed disclosures under the insider trading and unfair trade practice rules.

How it all unfolded

March 28: IVL board approved issue of shares or warrants to promoters

April 7: Preferential offer and issue of 38.86 million equity shares to Cinnamon Capital 

April 21: Preferential offer and issue of 47.39 million equity shares to Tamarind Capital 

April 28: Allotted nearly 33.6 million equity shares to promoter group entities 

June 07: Entered into consumer finance business, net worth increases to over Rs 1,000 crore

“IVL confirms that we have not received any notice from the exchanges pertaining to insider-trading violation. Being a public listed company, we are in constant communication with regulatory bodies with respect to our day to day activities and ensure utmost compliance to all regulatory guidance,” IVL spokespersons said when sent an e-mail query in this regard.

From filings to the exchanges, the IVL board of directors had on April 7 approved a preferential offer and issue of 38.86 million equity shares at an issue price of Rs 58.40 each, for cash, to Cinnamon Capital, a foreign portfolio investor registered with Sebi. IVL said it had raised the money to augment its long-term resources, and to meet funding requirements for business purposes.

Again on April 28, the company had allotted an aggregate of 33.6 million equity shares to promoter group entities (29.6 million equity shares) and to the chief executive officer and whole-time director (4 million equity shares), of the company, and upon its exercise, conversion of an equivalent number of warrants. The company had fixed an exercise price for each warrant at Rs 43.75.

In June, it had said it was getting into the consumer finance business. The net worth of subsidiary IVL Finance has increased to over Rs 1,000 crore, through capital investments from IVL.  

IVL Finance would be undertaking this consumer finance business, expected to significantly add to the consolidated profit of IVL, it had said in exchange filings.