If an entity raises over Rs 19,400 crore from 2.21 crore investors, can this be deemed a “private placement” and not a public issue of securities?

That is the bone of contention between market regulator SEBI and two Sahara group companies in their recent dispute. SEBI has taken the stance that this is a public issue requiring a company to follow all the filing and disclosure norms for such offers with the Sahara group contesting this.

Bigger than Coal India, Rel Power

Whatever the legal position on this, one thing is clear. Through its alleged “private placement” offer to “friends, associates, employees” and so on of the group, the Sahara companies have managed to raise more money than any one of India's largest initial public offers (IPOs) till date. After all, government-owned Coal India, the largest initial public offer in the country till date raked in only Rs 15,475 crore. The much-fancied Reliance Power IPO which had investors scrambling to open new demat accounts collected Rs 11,600 crore.

Of course, the Sahara real estate “private placement” was not a 7-day affair. The offer of optionally fully-convertible debentures was open for a period of three years from April 2008 to April 2011, during which the companies raked in this massive sum. That is not a mean feat either. To put it in perspective, all the IPOs which made it to the Indian markets in this three-year period garnered a combined Rs 60,000 crore.

Demat accounts

Then there is the matter of the number of investors who have poured money into the issue. The SAT order mentions that 2.21 crore investors subscribed to the Sahara debentures. Well, that seems to be more than the total number of retail investors in India's entire universe of listed stocks. At the last count, the total number of demat account holders in India with NSDL and CDSL put together, stood at 1.96 crore.

To add further perspective, the 44 mutual fund houses in India have only 4.7 crore retail accounts in their fold.

Allowing for multiple fund holdings for each investor, the actual investor base may not be very much larger than the number invested in the Sahara debentures.

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