STERN action on SME IPO SEBI cancels Trafiksol ITS listing, initial public offer proceeds locked in escrow account

Capital marketplace regulator Securities and Exchange Board of India (SEBI) connected Friday restricted banal speech BSE from listing shares successful Noida-registered Trafiksol ITS Technologies connected its SME platform. In an interim ex-parte order, SEBI said that the restrictions volition proceed until the completion of ongoing investigations successful the adjacent 30 days. At the clip of the issuance of the order, Trafiksol ITS Technologies had already completed an IPO. The regulator besides ordered that the proceeds from the contented volition beryllium kept successful an escrow relationship until then.

The marketplace regulator directed BSE to instrumentality due steps to guarantee that the proceeds from the IPO of Trafiksol ITS Technologies are placed successful “an interest-bearing  escrow account” with nary entree to these funds granted to Trafiksol ITS Technologies oregon its affiliates until further orders.

SEBI ordered Trafiksol ITS Technologies and Mumbai-based Ekadrisht Capital Pvt Ltd, the sole book-running pb manager (BRLM) to the issue, to afloat cooperate with the examination.

Trafiksol ITS Technologies is engaged successful providing intelligent proscription systems and automation solutions successful areas specified arsenic postulation absorption and toll management.

In May, the institution filed its DRHP with BSE to motorboat an IPO comprising caller issuance of 64.1 lakh equity shares connected the exchange’s SME platform.

The contented was offered successful a terms set of Rs 66-70 per share. The Trafiksol ITS Technologies IPO, which opened for subscription from September 10 to September 12, was subscribed 345.7 times, with a phenomenal effect crossed capitalist categories.

A sum of Rs 44.9 crore was raised successful the IPO.

As per the company’s DRHP, the proceeds from the contented were meant towards the following:

• Purchase of software
• Repayment/prepayment of borrowings
• Working superior requirements
• General firm purposes

The DRHP mentioned the request for an integrated bundle power centre (ICCC) to relation arsenic the halfway operational hub for astute cities. The institution had obtained a third-party vendor’s punctuation of Rs 17.7 crore for this asset.

After the closure of the issue, SEBI and BSE received complaints alleging discrepancies successful the projected usage of proceeds for procuring software. As per the complaints, the vendor appeared to beryllium “incapable of executing the contract”.

“It is noted that the Company has present projected to shelve the procurement of bundle arsenic projected successful the DRHP. Instead,Trafiksol has submitted to BSE that it would telephone for caller proposals from vendors and the declaration would beryllium awarded lone aft obtaining the consent of the shareholders. However, fixed the past behaviour of the Company ,I americium constrained to enactment that the said connection does not animate confidence,” wrote SEBI Whole-time Member Ashwani Bhatia.

“It cannot beryllium ruled retired astatine this signifier that the effort to grant the bundle declaration to a Vendor, who prima facie appears to beryllium a ammunition entity without immoderate anterior acquisition successful processing a bundle level of the quality disclosed by the Company successful its DRHP, was an effort to deliberately mislead investors and divert the IPO proceeds. Therefore, successful bid to safeguard capitalist interest, I americium of the considered presumption that issues raised successful this Order necessitate a elaborate investigation,” Bhatia added.

“SME IPOs person served arsenic an effectual avenue for tiny enterprises, which are successful galore ways the backbone of the economy, to rise capital. Therefore, enactment taken successful specified cases needs to beryllium done with utmost care,” the bid added.

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