₹100 Crore IPO Fund Diversion: FOCL Managed SME Issues Come Under SEBI’s Lens

The Securities and Exchange Board of India (SEBI) is probing alleged misuse of funds raised through nearly 20 SME IPOs managed by First Overseas Capital Ltd (FOCL), revealing diversions amounting to as much as ₹100 crore, as per the news reports. Funds intended for growth were reportedly transferred to promoter-linked entities and vendors without genuine operations.

₹100 Crore Misuse Detected Across Multiple SME IPOs

SEBI’s ongoing investigation suggests a pattern of fund diversion from IPO proceeds in issues managed by FOCL. Companies under scrutiny include Sameera Agro and Infra, QMS Medical Allied Services, Amanaya Ventures, and Italian Edibles, among others. Forensic reviews of bank accounts and vendor payments indicated that IPO funds, raised for business purposes, were instead sent to connected entities without clear business justification.

Transaction Patterns Reveal Inflated Vendor Payments

The modus operandi reportedly involves transferring funds within weeks of listing, often under the guise of vendor payments or upfront advances. In the case of Nirman Agri Genetics, as much as ₹18.89 crore, 93% of the raised amount was found misutilised soon after the IPO. Similarly, Synoptics Technologies allegedly transferred nearly ₹19 crore just before listing, stating them as issue-related costs.

Wider Scope Covering ₹560 Crore Raised via Public Issues

The 20 SME IPOs collectively raised about ₹560 crore over the past 3 years. SEBI is now evaluating whether similar diversion methods were employed across IPOs from Cell Point (India), On Door Concepts, Ducol Organics & Colours, Ishan International and others. Orders on these probes are expected in the coming months.

FOCL Already Penalised for Procedural Irregularities

Although SEBI passed final orders last month penalising FOCL for procedural breaches, including underwriting and disclosure lapses, the current diversion-focused investigation runs independently. The scope includes deeper scrutiny into escrow flows, promoter-beneficiary links and fund disbursal timelines.

Read More: SEBI Urges Digital Platforms to Tackle Fraudulent Investment Activities!

Conclusion

SEBI’s unfolding probe into FOCL-managed SME IPOs highlights significant concerns about the misuse of investor funds. With potential diversions of up to ₹100 crore, further regulatory actions are anticipated as more cases of fund redirection emerge across listings.

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