The Securities and Exchange Board of India has slapped a fine on special situations-focused private equity firm Samena Capital after finding that it violated rules governing foreign portfolio investors while making an investment in Mumbai-listed non-banking financial company Ugro Capital Ltd.
The capital markets regulator, through an order issued Tuesday, imposed a fine of Rs 2 lakh (about $2,225) on a Mauritius-registered entity of Samena after taking into consideration the corrective action the entity took later.
In its order, SEBI noted that Samena Special Situations Mauritius added a new share class (called Class III) when it invested Rs 20.02 crore in Ugro in December 2023 and changed the beneficial ownership (BO) of these shares from Samena Special Situations Fund II LP to Samena Capital. Also, the Mauritius entity made the disclosure about these two changes to the designated depository participant in March 2024, after a delay of 82 days.
In the order, SEBI adjudicating officer Jai Sebastian noted that Samena Special Situations Mauritius had even previously attracted administrative warnings in two instances for delay in intimation of change of director.
SEBI dismissed Samena’s arguments that the violations were technical and that it had remedied the situation before the regulator issued a show-cause notice.
“…the requirement of intimation of material changes in the information regarding addition of a new share class and the requirement of prior intimation regarding change in BO details of new share Class III before investing in India is vital for the regulations of FPIs… therefore, the alleged violations cannot be considered as mere technical violations,” the order noted, adding that these were “substantial violations” of the FPI regulations.
The order added that since Samena Special Situations Mauritius is a foreign entity, “the requirement of prior intimation before investing in India assumes significance” and that “failure in this regard is a serious lapse”.
Samena Capital had joined Ugro’s cap table in August 2018 as part of a qualified institutional placement coupled with a convertible warrant subscription. This followed a larger strategic move where former Religare Enterprises executive Shachindra Nath acquired a small listed firm and rebranded it with the backing of investors such as NewQuest (now TPG NewQuest), ADV Partners and IndGrowth.
At the time, Samena had committed to invest around Rs 177 crore but ended up shelling out only Rs 145 crore because it let part of the warrants lapse as the share price had more than halved when it was due to pay the remaining money. It also forfeited part of the upfront payment made for the warrants. Samena made a partial exit from Ugro two years ago. Last year, Samena came back to double down on the NBFC. It committed more capital to Ugro this year, but not before changing the deal terms.
