SEBI delays approval for HDB Financial, Hero FinCorp's IPOs over breach of rules: Report

The Securities and Exchange Board of India (SEBI) has held back the IPO papers of Hero FinCorp for nearly eight months and those of HDB Financial Services, a HDFC Bank subsidiary, for four months, the report cited sources as saying.

The market regulator delayed the as the share sales by these two large non-banking financial firms may inadvertently violate rules related to the sale of pre-IPO shares, the report said.

Moneycontrol couldn't verify the report independently.

Under the Companies Act, unlisted companies cannot add more than 200 shareholders in a financial year. These firms cannot also sell shares via private placement to more than 50 persons at a time. If shares are issued through private placement to public shareholders within six months, then it is considered a public issue.
A Hero Fincorp spokesperson also denied rule violation. The company has not raised funds beyond the allowed threshold of 200 investors at a time, the report cited the spokesperson as saying.

ChrysCapital-backed Hero Fincorp filed its draft documents on July 31 to raise Rs 3,668 crore. The IPO includes a primary fundraise of Rs 2,100 crore, which the lender plans to use for the augmentation of its Tier–I Capital base to meet its capital requirements towards onward lending.

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