The Securities and Exchange Board of India (Sebi) has barred Axis Capital Limited (ACL) from undertaking debt merchant banking activities. The interim decision is in response to Sebi's conclusions that ACL violated current regulatory standards by offering a guarantee for the redemption of non-convertible debentures (NCDs) under the guise of underwriting.
Sebi raised concerns that ACL’s actions could pose a risk to the financial system by potentially disrupting the orderly functioning of the market. The order was issued on Thursday after an inspection of ACL, prompted by a January 2024 news report titled 'Is Axis Capital an Investment Bank or a Hedge Fund?'. The report flagged concerns about a high-risk transaction involving ACL.
Related News |
Sebi Withdraws Controversial Statement, Pledges To Address Employee Concerns Internally
As per the SEBI's order, "Pursuant to publication of a reporttitled “Is Axis Capital an Investment Bank or a Hedge Fund?”dated January 16, 2024 authoredby Mr. Hemindra Kishen Hazari,a SEBI Registered Research Analyst,highlightingcertain concerns related to a high risk transaction undertaken byAxis Capital Limited (“ACL”/ “Noticee”), a SEBI registered Merchant Banker and a wholly owned subsidiary of the Axis Bank Limited, SEBI conducted aninspection of ACL."
"During inspection, it was, inter-alia, examined whether the transaction undertakenby ACL in respect of listed Non-Convertible Debentures (“NCDs”) of Sojo Infotel Pvt. Ltd. (“Sojo”) were in accordance with the provisions of SEBI Act, 1992and various regulations / guidelines/ circulars issued thereunder from time to time, including SEBI (Merchant Bankers) Regulations, 1992 (“MB Regulations, 1992”)," the order stated
ACL, a registered merchant banker under Sebi, is a wholly owned subsidiary of Axis Bank. Sebi’s investigation focused on ACL's role in a transaction related to Rs 260 crore NCDs issued by Sojo Infotel.
Related News |
'Complied With SEBI Disclosure Guidelines': Madhabi Puri Buch Amid Conflict Of Interest Row
The NCDs were issued in March 2021, with ACL functioning as the issue arranger and Axis Trustee Services Ltd. as the trustee. According to Sebi's order, the regulatory action was prompted by ACL's guarantee about the NCD redemption falling outside of the acceptable underwriting scope and Axis Capital Limited has been granted 21 days to file its objections to the interim order.