The capital markets regulator Securities and Exchange Board of India (SEBI) has ordered a close scrutiny of AstraZeneca Pharma India’s proposed delisting, on suspicion of a coordinated and concerted attempt by the British-Swedish drug maker and a foreign institutional investor (FII) named Elliott Group over possible violation of norms to see through the delisting.
In its preliminary probe, SEBI said that it suspects “that Elliott Group might be working in collaboration/concert with the promoters of AstraZeneca Pharmaceuticals Sweden to facilitate the delisting of AstraZeneca Pharma India Ltd”.
SEBI has now asked stock exchanges BSE and NSE to closely monitor the entire delisting process of Indian arm of AstraZeneca Pharmaceuticals AB.
AstraZeneca Pharma said last week in a stock market disclosure that it has obtained a green nod from the shareholders of the company through postal ballot for the delisting offer. However, final approval from the two exchanges is still required to acquire the shares.
Hence, the capital market watchdog has directed the two exchanges to report any aberrations noticed in the delisting process immediately and allow the final delisting of its shares only after satisfying themselves that the process has been fair and transparent.
“If suspected concerted/coordinated action of AstraZeneca Pharma Sweden and Elliott Group is found true then their act/conduct may amount to contravention of SEBI (Prohibition of Fraudulent and Unfair Practice Relating to Securities Market) Regulations, 2003,” SEBI said.
AstraZeneca had last year sold shares through an offer for sale (OFS) in the Indian arm to comply with local listing norms which restrict promoters of private firms to own a maximum of 75 per cent stake.
SEBI noted that all the key end subscribers (P-note holders and sub-accounts) of the shares offered via OFS were related to the Elliott Group. Also, the floor price was kept at Rs 490 per share, which was much lower from the previous day’s closing price of Rs 805.3 per share. The OFS was oversubscribed 2.84 times, but Elliott Group managed to mop up almost all the shares offered in OFS at an average price of Rs 625.35.
“It is observed that the final bid-price amendment by Elliott group through all six FIIs/subaccounts was significantly more than the indicative price,” SEBI said.
The market regulator has noted that the shares picked by Elliott Group, including shares acquired by the FII through the secondary market after the OFS, coupled with the stake held by the promoter of the drug maker, allow the firm to list.
SEBI had initiated the probe after reports that the OFS by its promoters was a deliberate attempt to subsequently get the Indian unit delisted.
Elliott Group voted in favour of the delisting proposal which provided the company with a green signal to move ahead with the delisting process.
This is the parent company AstraZeneca Pharma AB’s third attempt to delist its Indian arm. In past, it had made two unsuccessful attempts to get it delisted. Both those attempts failed as the retail shareholders rejected the price offered by the MNC.
On Wednesday, shares of the company closed the day at Rs 1,132.80 per share, down 1.69 per cent from their previous close on the BSE in flat Mumbai market.
(Edited by Joby Puthuparampil Johnson)