In an interim order, the regulator, said “the examination reveal a well laid out plan of the company (Synoptics Technologies) and the lead manager, FOCL (First Overseas Capital Ltd), to siphon away funds raised in the IPO”.
“Acting under the authority granted by an escrow agreement, FOCL prima facie appears to have issued instructions to the banker to the issue for transfer of funds under the guise of meeting issue-related expenses.
“The amount transferred ostensibly for meeting ‘Issue management fees, underwriting and selling commissions, registrar fees, and other IPO related expenses’ was Rs 19 crore and grossly disproportionate to the Rs 80 lakh disclosed as issue expenses in the RHP (Red Herring Prospectus),” Sebi’s whole time member Ashwani Bhatia said in the order.
As per the order, the amount accounted for more than 54 per cent of the total proceeds raised by Synoptics through the fresh issue of shares worth Rs 35.08 crore and 35 per cent of the total issue size (Rs 54.04 crore).
The markets watchdog concluded that FOCL, acting in concert with the Synoptics Technologies, siphoned off a substantial portion of the issue proceeds. Accordingly, Sebi directed FOCL not to take up any new assignments relating to merchant banking activities in the securities market till further directions from the regulator. Additionally, in respect of any pending assignments where FOCL is already engaged as a lead manager as on date, the issuer will appoint a monitoring agency to monitor the use of proceeds irrespective of the issue size, the order said.
Sebi observed that FOCL, during the period May 1, 2022 to April 30, 2025, undertaken Initial Public Offering (IPO) assignments for 20 companies which listed on SME segment of BSE and NSE.
The regulator said it will “examine the utilisation of funds raised in all these issues to identify whether a similar modus operandi was adopted in any of the other issues managed by FOCL during this period”.
Mumbai-based Synoptics Technologies raised Rs 54.04 crore through an Initial Public Offer (IPO) on the SME Platform of NSE in July 2023, and FOCL acted as the lead manager to the issue.
The order came after the Securities and Exchange Board of India (Sebi) examined the matter on receiving complaints alleging irregularities in the bidding process following the closure of the IPO.
