Smartworks Coworking IPO: SAT outcome on Wednesday

SAT to pronounce verdict on Wednesday

The fate of the Smartworks Coworking new share sale will be decided by the Securities Appellate Tribunal (SAT) on July 16. The tribunal asked all parties to submit short notes by the end of the day on July 15. Since it did not issue any direction on the matter, it is assumed that the company is free to proceed with the allotment to shareholders. The Rs 583-crore issue opened on July 10, closed on July 14 and is scheduled to be listed on July 17.

Infrastructure Watchdog, a non-governmental organisation (NGO), moved SAT on July 8 seeking directions to restrain the initial public offering (IPO) process. The NGO said it was a Section 8 company. Section 8 companies are 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, and that various disclosures related to ongoing proceedings with the Income Tax Department and the Ministry of Corporate Affairs, and a default to Punjab National Bank were not disclosed by the company in its IPO documents.

Smartworks Coworking Spaces and its promoters denied 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. They 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 public can raise the concerns, if any disclosure is not made in offer document. The company and its promoters also argued that the case is in the nature of a PIL or public interest litigation, and if such requests are considered by the tribunal, it may go against the interests of investors who have subscribed to the issue.

The company also informed the tribunal that all disclosures were made and that investors 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 subscribed to their reserved portion around 24.41 times.

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.