Sebi approval not needed for buying NDTV shares: Adani Enterprises

Says any subsequent attempt to return money received or original warrant certificate will have no legal effect on exercise of warrants by VCPL

The much-awaited and keenly-followed open offer by Adani Group to acquire another 26 per cent – after indirectly acquiring a stake of 29.18 per cent – in New Delhi Television (NDTV), which was scheduled to open on Monday, has been delayed as the requisite regulatory approvals for the offer are yet awaited. 

According to data available on the website of the capital markets regulator Securities and Exchange Board of India (Sebi), the market watchdog had sought certain clarifications related to the open offer from the merchant banker – JM Financial – on October 11 and the response is still awaited. 

Interestingly, it is believed that the regulatory approval might have been delayed also due to an impending appeal filed by Sebi in the Supreme Court, challenging an order by the Securities Appellate Tribunal (SAT), which had set aside a Sebi order against Vishvapradhan Commercial Private Limited (VCPL) – the firm through which Adani Group indirectly acquired a stake in the media major. 

The appeal was filed by the markets regulator on September 19. The appeal was triggered by the fact that while Sebi, through an order issued in June 2018, ruled that VCPL acquired control over NDTV through its acquisition of shares of RRPR Holding Pvt Ltd and should make an open offer, SAT set aside the regulatory order. 

Incidentally, legal experts believe while the impending appeal may have a bearing on the open offer, the regulator is unlikely to wait for the final decision of the apex court before giving its go-ahead for the open offer. 

“The regulator may direct the banker to include the ongoing case details as one of the risk factors in the draft document of the open offer and allow them to proceed with the offer,” said a lawyer specialising in securities market matters. 

“Appeals are regularly filed in various courts of law, including the apex court. If Sebi starts waiting for final rulings, it will cause a huge delay in many matters that are pending at Sebi for disposal or processing,” added the lawyer. 

While it is difficult to ascertain at this juncture whether Sebi -- hoping for a speedy disposal of the matter at the apex court -- will actually wait for the SC ruling, one thing is for certain that the open offer will have to wait for at least a few more days to begin as the capital markets watchdog will ensure there are no loose ends that could lead to more legal battles.

This assumes significance as its earlier interpretation of VCPL gaining control of NDTV was termed a “figment of its imagination” and “not based on any cogent evidence” by the appellate tribunal.  

Meanwhile, shares of NDTV gained nearly one per cent on Tuesday to close at ₹327.20 and are still trading significantly higher than the open offer price of ₹294.