SAT dismisses appeal to restrain the IPO of Smartworks Coworking: ‘Find no good reason’

SAT rejects appeal against Smartworks Co-working IPO

The Securities Appellate Tribunal (SAT) - redressal authority against decisions by market regulator Sebi - has dismissed an appeal by an NGO called Infrastructure Watchdog against Smartworks Coworking - a coworking company - paving the way for its listing on July 17.

In a verbal order, SAT said all parties were heard at length and the appeal is ‘dismissed, no costs’. While a detailed ordered is yet to be published, a stay request was made by Infrastructure Watchdog, however, SAT denied it saying, “We find no good reason to stay the order.”

After the favourable verdict, the Smartworks Coworking’s IPO can now go ahead, and the management can plan for listing on July 17, as was scheduled earlier. The Rs 583 crore issue had opened on July 10 and closed on July 14. The SAT heard argument by all sides on July 15, and pronounced its verdict on July 16.

Infrastructure Watchdog - a non-governmental organisation (NGO) - had moved SAT on July 8 seeking directions to restrain the initial public offering (IPO) process, alleging Smartworks Coworking was a Section 8 company, or charitable and not-for-profit entities.

The allegations were that benami funds - where money is from people fronting for others - were used as capital in Smartworks Coworking. Various disclosures related to ongoing proceedings with the Income Tax Department and the Ministry of Corporate Affairs along with a default against Punjab National Bank were not disclosed by the company in its IPO documents, the NGO had alleged. Smartworks Coworking Spaces and its promoters have denied all the allegations made by Infrastructure Watchdog.

The company and its promoters argued that the NGO was not even an investor, so its role in the litigation is questionable. Smartworks Coworking Spaces also alleged that the NGO was not independent but was acting as a front for a member of the extended family with whom the promoter group has a long-standing dispute. The NGO’s counsel denied these allegations and cited Sebi laws, under which not only investors but members of the public can raise concerns if any disclosure is not made in the offer document.

During the course of arguments, the company informed the tribunal that all disclosures were made and that investors had made a well-informed decision to subscribe to the IPO. Major investors like Tata Mutual Fund, Axis New Opportunities AIF, Aditya Birla Sun Life Insurance Company, Baroda BNP Paribas Mutual Fund, SageOne, SBI General Insurance Company, Trust Mutual Fund, BNP Paribas, and Société Générale were among the 12 institutional investors who participated in the anchor book.

The IPO received bids for more than 13.99 crore shares, against the offer size of 1.04 crore shares, according to data on the website of the National Stock Exchange. While non-institutional investors subscribed to their reserved portion 22.78 times, retail investors subscribed to their portion nearly 3.53 times. Qualified Institutional Buyers (QIBs) subscribed to their reserved portion around 24.41 times.

Also Read: Smartworks Coworking IPO: SAT outcome on Wednesday

Smartworks is an office experience and managed campus platform, with a total area of 8.99 million square feet across 50 centres in 15 cities.