The SEBI order against the Jaggi brothers has halted the IPO plans of Matrix Gas and Renewables and casts uncertainty over Blu-Smart's public offering.
Mumbai and Bengaluru: Anmol Singh Jaggi, the founder and managing director of Gensol Engineering Ltd, is facing significant challenges as his plans to contest a regulatory order barring him from directorships and stock market participation coincide with setbacks for his other ventures, Matrix Gas and Renewables Ltd and Blu-Smart.
On Wednesday evening, Jaggi addressed investors in Matrix Gas, stating that the Securities and Exchange Board of India (SEBI) order was "one-sided" and that he intends to challenge it, according to an investor who attended the meeting. However, the fallout from the SEBI action has already led to the postponement of Matrix Gas's planned initial public offering (IPO) later this year. Blu-Smart, which had been aiming for a public listing in the second half of next year, also faces an uncertain future.
The investor meeting was convened by those who had invested ₹155 crore in Matrix Gas in a pre-IPO funding round. In July 2023, these investors paid a premium of ₹122 per share (face value of ₹10). The same month, the company filed its draft prospectus with the National Stock Exchange to list on its Emerge platform, designed for small and medium enterprises. The IPO, involving 5.6 million shares, could have been worth at least ₹750 crore.
SEBI's accusations against Jaggi, made on Tuesday, include securities fraud and forgery. The regulator has prohibited Anmol and his brother, Puneet Singh Jaggi, from holding executive or board positions at Gensol or trading in securities until further notice. This restriction is a direct impediment to Matrix Gas's IPO plans, as Jaggi is barred from dealing in securities, either directly or indirectly.
While securities lawyer Chirag Shah noted that technically, Matrix Gas could proceed with the IPO if there's no offer for sale from the promoters (since SEBI's order targets the promoter, not the company), he acknowledged that the regulator's order makes it highly unlikely. Jaggi reportedly assured investors that Matrix Gas has sufficient reserves and doesn't require additional funding, also stating that the company is debt-free.
Blu-Smart, another Jaggi-affiliated company, is also facing operational issues, with riders reporting missing cabs in Bengaluru, Delhi, and Mumbai. A Blu-Smart spokesperson declined to comment on these issues. According to an investor presentation from October last year, Blu-Smart intended to go public in the second half of 2026. The company, claiming to have 8,000 cars as of September 30, 2024, has raised $220 million in equity and debt from investors.
Gensol's financial ties to Blu-Smart and Matrix Gas are also under scrutiny. Gensol provided ₹148.33 crore in loans to Blu-Smart and ₹231.85 crore to Matrix Gas in FY24, according to Gensol's annual report. Shriram Subramanian, managing director of proxy advisory firm InGovern, believes that the SEBI findings have damaged the trust of stakeholders in Gensol, making business transactions with the company risky.
The situation has also impacted Gensol's stock, with a 68% fall leading creditors to seize 7% of promoter pledged shares.
