Archive · 10 Nov 2025
SEBI Probes FOCL for Diverting Up to ₹100 Crore from SME IPO Funds
Imagine companies that want to raise money by selling small parts of themselves, called IPOs.
A helper called a merchant banker, like FOCL, assists them.
Now, the big money police, SEBI, is looking into FOCL because they suspect FOCL might have helped some companies take up to ₹100 crore of that money and use it wrongly.
SEBI found about 20 companies that FOCL helped, and the money seems to have disappeared soon after the companies started selling their shares.
It's like the money raised for building things got used for something else, or went to people connected to the company bosses without a good reason.
SEBI already warned FOCL about mistakes they made before, but this new investigation is about where the money actually went.
SEBI is investigating potential diversion of up to ₹100 crore from IPO funds in nearly 20 SME issues managed by merchant banker FOCL.
The investigation has uncovered similar patterns of fund diversion across several SME listings handled by FOCL.
Funds raised for working capital or business expansion were allegedly diverted within weeks of listing to entities linked to promoters or vendors.
This current probe into fund misuse is separate from a previous SEBI order against FOCL for procedural lapses.
The modus operandi examined includes inflated vendor payments or advances to promoter-controlled entities, similar to cases where significant funds were misused.
- Who
- Securities and Exchange Board of India (SEBI) and First Overseas Capital (FOCL)
- What
- SEBI is investigating potential diversion of up to ₹100 crore from SME IPO funds managed by FOCL.
- When
- The investigation is ongoing; SEBI issued a final order against FOCL last month. Orders are expected in the next few months.
- Where
- India
- Why
- SEBI found evidence of IPO proceeds being siphoned off to entities linked to promoters or vendors with no genuine operations, indicating a potential misuse of public funds.
Alleged Diversion of IPO Funds
Previous Procedural Lapses by FOCL
Nature of Allegations
Alleged Diversion of IPO Funds
SEBI is investigating evidence of up to ₹100 crore of IPO funds being siphoned off in nearly 20 SME issues managed by FOCL. Funds raised for working capital or business expansion were allegedly diverted within weeks of listing to entities linked to promoters or vendors with no genuine operations, possibly through inflated vendor payments or advances to promoter-controlled entities.
Previous Procedural Lapses by FOCL
SEBI previously barred merchant banker FOCL for procedural breaches, including net-worth shortfall, underwriting violations, and disclosure lapses, as detailed in a final order issued last month.
Scope of Investigation
Alleged Diversion of IPO Funds
The current probe focuses on the potential misuse of public-issue proceeds across multiple SME listings handled by FOCL, with the total siphoned amount possibly increasing as the investigation progresses.
Previous Procedural Lapses by FOCL
The earlier SEBI order against FOCL addressed specific regulatory and procedural violations, separate from the ongoing investigation into the alleged diversion of IPO funds.
- Regulator
- Securities and Exchange Board of India (SEBI)
- Merchant Banker Under Scrutiny
- First Overseas Capital (FOCL)
- Potential Fund Diversion Amount
- Up to ₹100 crore
- Number of SME IPOs Investigated
- Nearly 20
- Total Funds Raised by These Companies (Past 3 Years)
- Around ₹560 crore
- Examples of Investigated Companies
- Sameera Agro and Infra, Amanaya Ventures, QMS Medical Allied Services, Italian Edibles, Graphisads, Electro Force (India), Shree OSFM E-Mobility, Varanium Cloud, Cell Point (India), On Door Concepts, Ducol Organics & Colours, Ishan International
- Date of Publication
- November 9, 2025