The Securities and Exchange Board of India (SEBI), the capital market regulator, has issued a reprimand to five investment banks for alleged failure to comply with disclosure requirements pertaining to the proposed ₹6,000 crore initial public offering (IPO) of EbixCash, the fintech subsidiary of Ebix.
In an ‘administrative warning’ sent to the five lead managers overseeing the IPO, namely Motilal Oswal Investment Advisors, Equirus Capital, ICICI Securities, SBI Capital Markets, and Yes Securities, SEBI accused them of not adequately disclosing information in the draft red herring prospectus (DRHP) of EbixCash. These banks have also been cautioned by SEBI to exercise ‘greater care’ to prevent such lapses in the future. As of the time of this report, email queries directed to SEBI, EbixCash, Motilal Oswal Investment Advisors, Equirus Capital, ICICI Securities, SBI Capital Markets, and Yes Securities remained unanswered.
In a regulatory disclosure, ICICI Securities confirmed that it received an ‘administrative warning’ from SEBI on September 4, 2023, concerning the EbixCash IPO.
“SEBI observed that ICICI Securities had failed to exercise due diligence in making disclosures,” stated the investment bank.
The approval process for the EbixCash IPO took an extended period of nearly 13 months, significantly longer than the typical processing time of 60-90 days. In 2021, the average processing time for IPO approvals was 75 days, compared to 82 days in 2020.
EbixCash, based in Noida, is a technology-driven provider of digital products in both the B2C and B2B sectors. The company filed its DRHP in March 2022 and received SEBI’s approval in April 2023. It is reported that the company intends to raise between ₹6,000 crore and ₹8,000 crore through the public offering.
EbixCash is a leader in the international remittance sector and operates forex services at nearly 20 international airports, including Delhi, Mumbai, Hyderabad, Chennai, and Kolkata. Its parent company, Ebix, is a US-based technology firm listed on the Nasdaq.
In July, SEBI had previously admonished investment banks for insufficient disclosures in IPO documents. In an advisory issued to the Association of Investment Bankers of India (AIBI), SEBI noted that offer documents often lacked comprehensive disclosures related to non-consenting promoter group companies and associates.
