EbixCash Fined INR 6 Lakh by SEBI for IPO Violations

The Securities and Exchange Board of India (SEBI) has imposed a penalty of INR 6 Lakh on Ebix’s entities, EbixCash Limited and Ebix Singapore Pte. Limited, for misrepresentation of facts and disinformation in the IPO documentation process. 

SEBI found the entities guilty of violating multiple public issue regulations, including Schedule IX of the Issue of Capital and Disclosure Requirements (ICDR) norms, which govern communication and disclosure practices for issuers.

In its adjudication order dated December 19, SEBI highlighted critical omissions in EbixCash’s 2022 draft red herring prospectus (DRHP). Notably, key information such as regulatory actions and financial adjustments was inadequately disclosed. 

A significant focus was the misleading press release issued by EbixCash in response to accusations from a Hindenburg Research report and a "letter of displeasure" issued by the Reserve Bank of India (RBI).

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The Hindenburg report, released in 2022 alleged inflated revenue figures by Ebix Inc, the US based parent of EbixCash. It raised concerns over non-existent gift card revenue, substantial debt and frequent auditor changes, suggesting accounting irregularities. Following this, Ebix sought and obtained a Delhi court order restricting access to the Hindenburg report in India.

SEBI’s order revealed discrepancies in EbixCash’s revenue restatement after RBI’s directive to amend co-branding agreements with PPI issuers. Despite a 64.35%–75% reduction in reported revenue from FY2021–2023, EbixCash misleadingly described these changes as "numerically immaterial" in a press release. 

SEBI also noted that EbixCash issued the misleading press release without obtaining prior approval from its book running lead managers (BRLMs), compounding the breaches.

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Considering these infractions, SEBI imposed the INR 6 Lakh fine, directing payment within 45 days.  

EbixCash initially sought to raise INR 6,000 Cr via an IPO in March 2022, but the public issue was never launched. Meanwhile, the parent company, Ebix Inc., faced severe financial challenges, defaulting on a $617 Mn loan and filing for bankruptcy in December 2023. 

In August 2024, Eraaya LifeSpaces acquired Ebix Inc. and its subsidiary EbixCash for $151.577 Mn, following years of corporate governance failures and declining fortunes.

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