Sebi said it received complaints from various entities regarding a purchase of a software from a third party vendor, which on prima facie appears to be a shell entity without any prior experience in developing a software platform.
The regulator said a thorough investigation will be conducted into the disclosures made by Trafiksol in its DRHP filed with BSE. The investigation will be completed within 30 days
The SME IPO, which opened in September, received robust investor response with an overall subscription of over 300 times at close. However, the listing did not take place.
The net proceeds from the public offer were proposed to be used for purchase of software, repayment of debt, working capital requirements and other general corporate purposes.
Following the initial complaints received on the purchase of software, Sebi has asked BSE to examine the allegations and take appropriate action. The BSE then advised the merchant banker and issuer to retain the entire issue proceeds in an escrow account and deferred the listing.After the listing was postponed, Sebi received several complaints from investors who had been allotted shares in the IPO. The investors primarily requested for cancellation of the IPO and refund of their investments.
Meanwhile, Sebi separately called Ekadrisht, the book running lead manager for the IPO, for a meeting to provide clarifications on the issues raised in the complaints. The banker, however, was unable to provide satisfactory responses.
Sebi noted that the Mumbai-based third party vendor, from which software worth Rs 17.7 crore proposed to be purchased, had not filed financial statements with Ministry of Corporate Affairs (MCA) for more than 3 years and had reported NIL revenue in the last year for which financials were filed.