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CNBC-TV18 Exclusive: LIC Housing, Barbeque Nation under SEBI lens on preferential issue proposals

CNBC-TV18 has learned that the Securities and Exchange Board of India has asked exchanges to examine preferential issue proposals of LIC Housing Finance and Barbeque Nation. The market regulator has initiated a preliminary inquiry on the preferential issue from LIC Housing Finance and Barbeque Nation, asking the exchanges to examine the issues from both these firms.

The PNB Housing Finance’s preferential allotment to Carlyle and related buzz around it has put a spotlight on other companies planning for similar issues.
CNBC-TV18 has learned that the Securities and Exchange Board of India has asked exchanges to examine preferential issue proposals of LIC Housing Finance and Barbeque Nation. The market regulator has initiated a preliminary inquiry on the preferential issue from LIC Housing Finance and Barbeque Nation, asking the exchanges to examine the issues from both these firms.
It is understood that exchanges likely have issued an examination notice to both these companies with respect to the valuation of the preferential issue.
The preferential issue from both these companies could be in violation of the Articles of Association (AoA) of the company and the exchanges are awaiting a reply from both LIC Housing Finance and Barbeque Nation.
As far as LIC Housing Finance is concerned, the AoA of the company state that the valuation report is required for the preferential issue from a registered valuer. However, when it comes to the proposal, the company said that that particular valuation report from a registered valuer is not required. Hence, a case has been made of moving against the AoA of the company.
LIC Housing Finance plans to raise about Rs 2,334 crore and Barbeque Nation plans to raise about Rs 100 crore.
LIC Housing plans to raise about Rs 2,334.69 crore through the preferential issue of equity shares to Life Insurance Corporation of India (LIC).
In a regulatory filing, the mortgage lender said that it will issue 4.54 crore equity shares to LIC at Rs 514.25 per share, which will raise the latter’s share to 45.24 percent as against the pre-issue shareholding of 40.31 percent.
The company will seek the shareholders' nod for the proposed preferential allotment of shares during its Extraordinary General Meeting on July 19, it said in another regulatory filing.
Barbeque Nation plans to raise about Rs 100 crore with the issue of preferential shares.
The Extraordinary General Meeting (EGM) for both companies is scheduled on July 19 to get the shareholder approval for preferential issues.
Watch the accompanying video of CNBC-TV19’s Yash Jain for more details.