The Securities and Exchange Board of India (Sebi) is understood to have accessed ?information? that suggests market intermediaries, especially those known to fund promoters using their shares as collateral, may have played a role in the dilution of the promoters’ stake in United Breweries Holdings (UBHL). The promoter holding in UBHL fell from 51.50% to 43.09% in the three months to September, without the mandatory announcement to the stock exchanges.
What the regulator wants to find out is whether promoters or the management at UBHL and Kingfisher Airlines attempted to ?play? the market in recent months given they were in possession of price-sensitive information at a time when critical decisions were being deliberated across group companies including United Breweries and Kingfisher Airlines.
Sources close to the development say a formal enquiry will be launched soon if prima facie evidence warrants one. Sebi will probe whether provisions related to trading, on the basis of unpublished price-sensitive information, have been violated. Regulation 3 of the Sebi (Prohibition of Insider Trading) Regulations prohibits insiders from dealing in securities while in possession of unpublished price-sensitive information.
?The prohibition contained in regulation 3 of the regulations apply only when an insider trades or deals in securities on the basis of any unpublished price-sensitive information and not otherwise. It means that the trades executed should be motivated by the information in the possession of the insider,? the Securities Appellate Tribunal observed in an order early this year.
Data on shareholding show that LKP Finance bought a stake of 7.36% in UBHL at a time when the promoters reduced their holding by 8.41%. LKP Finance is a listed brokerage entity and a non-banking financial company (NBFC) known for its operations in the forex and promoter funding segments.
Sources said that there has been no communication from the NBFC or the company with regards to this change in stake, giving rise to further doubts. According to creeping acquisition norms, if any entity acquires more than a 5% stake in a company, an announcement needs to be made on the stock exchanges. Interestingly, LKP Finance had earlier bought optionally convertible debentures (OCDs) of Kingfisher; the debt-ridden airline is yet to restart operations after a strike.
At the end of the September quarter, LKP Finance held a stake of 16.48% in Kingfisher Airlines. The data for the previous quarter ended June 30, however, do not feature the name of LKP Finance. According to a stock exchange announcement in June, the NBFC was allotted shares on conversion of 2.82 crore 8% OCDs.
Sebi is understood to have asked the UB Group chairman and UBHL to submit information on the share sale in three of Vijay Mallya?s companies that led to the promoter holding in UBHL reducing from 51.5% to 43.09%.
The promoter holding in UBHL has fallen from 51.50% in June to 43.09% at the end of September. These transactions have taken place at a time when the Mallya-owned United Spirits was in talks with global liquor major Diageo ? maker of Johnnie Walker whisky and Smirnoff vodka ? for a possible stake sale.
Late last month, however, Mallya was quoted in a Reuters report as saying: ?Whenever we need to say something we will, we keep discussing but we don?t know whether a deal will happen or not.? He also ruled out selling his prized assets to rescue Kingfisher Airlines, which led to a huge fall in the share price of United Spirits.
