Mon Sep 30 19:20:12 UTC 2024: ## SEBI Raises Concerns Over IPO Funds Used to Repay Promoter Loans, Delays Several IPO Approvals

**Mumbai, September 30, 2024:** The Securities and Exchange Board of India (SEBI) has raised concerns over companies using funds raised through Initial Public Offerings (IPOs) to repay loans taken by promoters or their groups, causing delays in approving several IPO applications.

Sources familiar with the matter informed Moneycontrol that while there are no specific regulations prohibiting companies from using IPO proceeds for this purpose, SEBI is now reluctant to approve such applications. The regulator has requested several companies to revise their IPO fund utilization plans and seek alternative sources to repay promoter loans.

SEBI has reportedly instructed some companies to first refinance promoter loans from financial institutions and then use IPO funds to repay those institutions instead of directly repaying promoter loans with IPO proceeds.

While SEBI has not responded to Moneycontrol’s queries, it is believed that the regulator’s move is aimed at ensuring that IPO funds are used for the company’s growth and expansion, not to settle personal debts.

Several merchant bankers have appealed to SEBI to reconsider its stance as the new guidelines have raised concerns within the industry. A meeting is expected to be held this week to discuss a solution.

**Afcons Infrastructure, a construction company owned by the Shapoorji Pallonji Group, has already revised its IPO funding plan following SEBI’s directive.** The company had initially planned to use ₹100 crore from the IPO to repay a loan from Shapoorji Pallonji Finance Private Limited, a promoter group company. Following SEBI’s concerns, the company will now use this money to repay a loan from State Bank of India.

This move by SEBI underscores its commitment to protecting investor interests and ensuring transparency in IPO funding. It remains to be seen how the regulator and industry stakeholders will resolve this issue in the coming weeks.

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