Sebi puts Sterlite Electric IPO on hold over US short seller’s allegations against parent Vedanta

Sebi typically puts those IPOs on abeyance where the regulator has uncovered non-compliance with rules or if there is pending or ongoing regulatory scrutiny.

Market regulator Securities and Exchange Board of India (Sebi) has put Sterlite Electric’s Initial Public Offering (IPO) on hold following allegations by US-based short seller Viceroy Research against parent Vedanta Group, two people with direct knowledge of the matter have told Moneycontrol.

The regulator is currently examining the allegations by Viceroy and has also sought relevant details from the company. The regulator’s website on October 27 showed that Sterlite’s public issuance has been kept in abeyance. The issue is expected to receive a green light only after Sebi takes a view on whether Viceroy’s allegations against Vedanta and Hindustan Zinc warrant a detailed probe, people cited above said.

Sebi typically puts IPOs on abeyance where it has uncovered non-compliance with rules, or if there is pending or ongoing regulatory scrutiny. Once the pending non-compliance is resolved or settled, Sebi generally gives a green light. In the recent past, Sebi has put several IPOs in abeyance, including WeWork India, JSW Cement, SK Finance and National Securities Depository (NSDL).

“Since the allegations made by Viceroy Research are serious, Sebi is examining the matter. However, as of now it remains a fact verification exercise and not a probe, and is expected to take a few months,” said one of the persons cited above. “In the past, Sebi has put many IPOs under abeyance initially and they were allowed by Sebi subsequently once the regulatory issues were resolved,” another person with direct knowledge of the matter added.

Sterlite Electric manufactures capital goods and provides system integration for power transmission and distribution. The company is a subsidiary of the Vedanta Group and had filed the offer document in early October 2025, proposing to raise funds through a mix of a fresh issue and an Offer for Sale (OFS) by the promoter and existing shareholders. The total offer size of the IPO is estimated at Rs 1,500 crore.

Sterlite Electric had disclosed this Sebi examination into Vedanta, Hindustan Zinc and other companies in its offer document.

“A series of reports has been released by a short seller alleging certain matters against the Vedanta Group. SEBI vide its email dated August 18, 2025 and September 4, 2025 has demanded the production of information and documents from Hindustan Zinc, for the transactions alleged in the short seller reports, before the investigating authority, under Sections 11(2) and 11C(2), (3) of the SEBI Act. Hindustan Zinc was required to submit such documents by August 25, 2025 and September 12, 2025, which has been responded to SEBI on August 25, 2025 and September 12, 2025. The matter is currently pending,” said Sterlite in its DRHP.

In a series of reports, Viceroy Research has alleged that the management is draining the Indian listed entity Vedanta to prop-up highly leveraged UK parent Vedanta Resources. It also alleged serious regulatory violations by the company including potentially unlawful fund expatriation and tax evasion. The report by the short seller added that Singaporean authorities were investigating a substantial $1.27 billion remittance involving the group, and highlighted several weaknesses in Vedanta’s business, including failure to secure to secure captive bauxite supply. Viceroy Research alleged that these findings put the company’s long-term profitability at risk.

The initial report of Viceroy Research in July 2025 was followed by subsequent reports in September and October, however, the allegations did not have any impact on Vedanta’s shares which have been up by about 10 percent since July when the first report was published by Viceroy.