Post de-merger, Octant Interactive shareholders still await listing of spun-off business
Moneylife Digital Team 22 July 2011

It has been seven months since Octant Interactive demerged its financial arm and vested in Five X Finance. But Five X Finance is still awaiting the market regulator’s permission for listing—leaving investors in the lurch   

Octant Interactive Technologies Ltd demerged its financial division business and vested in Five X Finance and Investment Ltd (with a whopping 80% of its capital) on 7 December 2010. Octant Interactive Technologies Ltd de-merged into Octant Industries and Five X Finance. Effectively, Octant Interactive Technologies Ltd is now called Octant Industries.

However, seven months after the de-merger, Five X Finance has not yet been listed, leaving investors stranded with the shares.

Even the market regulator seems to be not interested in investors' interest. Five X Finance has been waiting for SEBI (the Securities and Exchange Board of India) approval since January 2011, for listing.

As per the Scheme of Agreement, post the de-merger, Octant Interactive Technologies Ltd's shareholders got 4 shares in Five X Finance and Investment for every 5 shares in Octant Interactive which they held. For every 5 shares of Octant Interactive, the equity holder was to receive 1 share of Octant Industries, each share with face value of Rs10. In other words, the shareholders of Octant Interactive were given 80% of their current holding in Five X Finance and 20% in Octant Industries. This effectively reduced shareholder stake in Octant Industries.

The shareholding in Octant Industries—as on 30th September—was 2.56 crore equity shares, which was effectively reduced to 51.38 lakh equity shares.
"It is a really horrible experience for all of the investors, as our major capital and hard-earned money is stuck with Five X since the past 7 months and we are not getting a response from anywhere," an investor told Moneylife, preferring anonymity.

The listing of Octant Industries took place on 7 February 2011 at Rs12. The company informed investors through an update on the BSE (Bombay Stock Exchange) website on 19 April 2011 that Five X Finance is "under the process of obtaining listing approvals with the concerned exchanges for which the Company has applied for the permission of the respective authorities concerned." It has been almost three months since this announcement-and there are no signs of the new company being listed.

When Moneylife contacted Octant Industries, a spokesperson of the company said, "Five X Finance is now being looked after by a different management. Octant Industries has nothing to do with them."

Five X, on the other hand, said in an e-mail reply to Moneylife, "The demerged entity Five X Finance and Investment has moved the application with SEBI for Relaxation of Rule 19(2) (b) of the Securities Contracts Regulations Rules 1957, which is under the consideration of SEBI. (The) Company is following up with SEBI. Unless SEBI gives its approval, which is process driven, we will not be in a position to move the application for listing of Five X Finance and Investment Limited. We are waiting for the same. Any demerged entity prior to Listing after obtaining the Hon'ble High Court Approval, needs mandatory approval for Relaxation of Rule 19(2) (b) of the Securities Contracts Regulations Rules 1957. We have applied to SEBI through Stock Exchanges where the company got listed for the said relaxation in the month of January 24th 2011."

Mumbai-based First Call Equity, which was the merchant banker for the merger/demerger plan said, "The formalities required for listing the company are on. We have submitted all the necessary documents to SEBI. It's a totally new company and hence the delay. In about one month's time, the company should be listed."

This indicates that the listing procedure is pending with the SEBI, and investors are in a limbo.

Moneylife has pointed out earlier instances where companies, despite coming out with demerger plans, have not been not listed on the bourses for a long time. (SEBI keeps Innovassynth investors hanging as stock awaits listing approval for more than a year)

When they it was going in for the de-merger, Octant Interactive had stated, "Both companies have (the) potential to attract different set of investors, require different kind of investment and need to pursue different business strategies." The company said its "focus is on the IT industry" and therefore it considered separating the finance business. According to the statement, post de-merger, Octant Interactive would ostensibly be able to focus on its core business. However it is interesting to notice that despite being a software company, the company website "http://www.octantinteractive.com/" is still under development.

According to the BSE website, Octant Interactive is into "Speciality Chemicals". Along with the de-merger, Octant Interactive merged with Swarnajyothi Agro & Exports Ltd, Indrabati Energies Pvt. Ltd. and Vanishekar Green Energy Pvt. Ltd. The only website running was that of "http://swarnaagro.com", where Octant Industries mentions it engaged into a greenfield project to manufacture castor oil derivatives.

Comments
Ninad Avasare
1 decade ago
Now they already have got permission from SEBI on 2nd Sept 2011 for listing of Five X ...Today it is almost 45 days since they have got permission from SEBI but even after 45 days there are no signs of listing of Five X...It is really frustrating as company is not even taking care to reply email of investors..
indian
Replied to Ninad Avasare comment 1 decade ago
SEBI should also be brought under JAN LOKPAL bill. All corruption organization needs revival.
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