Mumbai: India’s stock market regulator Securities and Exchange Board of India (Sebi) has launched a probe into a “sharp spike”in the stock price of Tech Mahindra Ltd several minutes before its winning bid for Satyam Computer Services Ltd was announced, people familiar with the development said on condition of anonymity.
They said Sebi as well the stock exchanges were probing details of buyers during that period and also if price-sensitive information was “leaked” to the market in any manner.
Stock exchange data show that the Tech Mahindra stock jumped as high as 22% in just nine minutes between 11.35am and 11.44am on 13 April, when the bids were opened. The stock spurted 12% in just three minutes between 11.38am and 11.41am, exchange data shows.
Unfair trading? Sebi headquarters in Mumbai. The regulator seeks to know whether price sensitive information was leaked to the market. Abhijit Bhatlekar / Mint
Sebi wants to understand this sharp spike in the stock price as Tech Mahindra’s winning bid was flashed on major news channels only at 11.56am, the people said.
Tech Mahindra won the bidding on Monday for a stake in Satyam, which has been struggling since its founder B. Ramalinga Raju confessed to falsifying the firm’s accounts. Raju, his brother and seven other people, including two Price Waterhouse auditors, are in jail on charges of conspiracy, cheating, forgery and falsification of accounts.
Sebi is also examining if Satyam should disclose additional information shared with the bidders and will take a view on disclosing such information in the open offer document to public, the people said. As part of the bidding process, potential bidders for Satyam had access to the additional information.
The Company Law Board, that governs India’s registered firms, on Thursday approved Tech Mahindra’s takeover of Satyam.
Venturebay, a subsidiary of Tech Mahindra, will pay Rs1,756 crore for a preferential allotment of new shares in Satyam, to pick up a 31% stake in the company by 21 April. It will also make a public open offer for an additional 20% stake at a cost of at least $225 million (around Rs1,125 crore) to gain a majority holding in Satyam.
Sebi wants a review of the employee quota in public issues and has asked for the examination of the need for such a quota, the people said.