The restriction comes as an interim measure after the regulator found that Axis Capital had provided a guarantee/indemnity towards redemption of NCDs in the guise of underwriting, which it is not permitted to do under the existing regulatory framework.
The activity, according to the Sebi order, poses a risk to the financial system as it can potentially disrupt the orderly functioning of the market.
The market regulator on Thursday pronounced the order following an inspection of ACL, which was done after a January 16, 2024, news report titled ‘Is Axis Capital an Investment Bank or a Hedge Fund?’ highlighted certain concerns related to a “high risk transaction undertaken by Axis Capital Limited (ACL)”.
ACL is a Sebi-registered merchant banker and a wholly owned subsidiary of Axis Bank.
Sebi, in its investigation, examined whether the transactions undertaken by ACL with respect to listed non-convertible debentures (NCDs) of Sojo Infotel were in accordance with the regulatory norms.Sojo issued NCDs of Rs 260 crore on March 25, 2021, and Axis Trustee Services Ltd. was the trustee while ACL was the arranger to the issue.Sojo is a private limited company engaged in the business of high-technology consultancy services in the field of electronics, telecommunications and information technology including software.
ACL has the liberty to file its objections within 21 days.
