SEBI Probes Corporate Capital Ventures for Alleged IPO Irregularities

Corporate Capital Ventures, a Delhi-based merchant banker specialising in SME IPOs, is under investigation by the Securities and Exchange Board of India (SEBI) for alleged irregularities in managing public issues. The probe was initiated following an anonymous complaint alleging insider trading by the merchant banker’s directors and their associates.

The complaint specifically pointed to the allotment of shares in Oriana Power to relatives of Kulbhushan Parashar, one of the company’s directors, prior to the IPO. Additionally, Unizon Fintech, a company linked to Parashar, subscribed to IPOs managed by Corporate Capital Ventures, raising concerns about potential conflicts of interest.

SEBI’s investigation has focused on six SME IPOs managed by Corporate Capital Ventures between August 2022 and June 2024. The regulator has issued a notice to the merchant banker, its directors, and associated entities seeking explanations for the alleged irregularities.

The SME IPO market has come under increased scrutiny due to instances of oversubscription and subsequent abnormal price movements. SEBI has taken steps to address these concerns, including implementing a price cap for SME IPOs and enhancing surveillance mechanisms.

The investigation into Corporate Capital Ventures highlights the regulatory challenges in the SME IPO space. As the market continues to grow, ensuring fair practices and investor protection becomes increasingly important.

In March, Sebi chairperson Madhabi Puri Buch said that the capital market watchdog had observed signs of manipulation in trading and issuance in the SME space. She further said that Sebi is working to introduce additional disclosures in the SME space.

“We do see signs of manipulation in the SME (small and medium enterprises) segment… We can see certain patterns. However, as per our regulation, the way that we need to construct the entire case, we do need to take some time to do that in a robust manner,” Buch had said in March.

Key Issues

• Alleged insider trading by merchant banker directors
• Potential conflict of interest in IPO management
• SEBI’s investigation into the matter
• Regulatory scrutiny of the SME IPO market

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.