Sebi holds back HDFC Mutual Fund IPO

MUMBAI, May 6 (Business Standard): The Securities and Exchange Board of India (Sebi) has put the much-awaited initial public offer (IPO) of equity from HDFC Mutual Fund on hold.

The processing status for IPOs on Sebi's website states this one is being "kept in abeyance for examination of past violations". On April 26, the markets regulator sent a letter to investment banks handling the IPO, seeking clarifications.

Those in the sector say Sebi keeps an IPO in abeyance only for violations of a serious nature or such that these would take time to resolve. Beside HDFC MF, those of Srei Equipment Finance and Vishwaraj Sugar Industries - filed last year with Sebi-have been kept in abeyance.

HDFC MF had filed its offer document with Sebi on March 15. "Sebi takes about six weeks to clear an IPO if everything is in place. If the IPO goes on hold on regulatory grounds, the process can get delayed by a few months, till the issue is resolved," said an investment banker, asking not to be named.

Sebi has not made public the exact nature of the violations. The offer document with Sebi mentions pending proceedings on breach of the rules on securities. "We (promoters, directors and group companies) are also involved in an investigation initiated by Sebi with regard to alleged front-running and violation of securities laws," it states. Past serious charges against the fund house include a case of "front-running" by its equities dealer, Nilesh Kapadia.