The Securities and Exchange Board of India (Sebi) has put on hold the proposed ₹4,000-crore initial public offering (IPO) of JSW Cement.

The market regulator on its website said the “issuance of observations (has been) kept in abeyance”, without specifying the reasons.

JSW Cement had filed the draft IPO papers with Sebi last month. The proposed float consists of a fresh issue of equity shares of ₹2,000 crore and an offer-for-sale (OFS) of an equal sum by investor shareholders, according to the draft red herring prospectus.

A Moneycontrol report said the offer has been temporarily put on hold because of an old case involving Hexa Tradex Limited, a listed company, which is a promoter of JSW Cement.

The regulator had issued show cause notices to Hexa Tradex and many members of the Jindal family including Prithvi Raj Jindal, Naveen Jindal, Ratan Jindal and Sajjan Jindal, who belong to the promoter group of Hexa Tradex.

Sajjan Jindal is also part of the JSW Cement promoter group.

This was revealed in DRHP of Jindal Cement.

The DRHP said the regulator was examining an alleged regulatory violation involving the inter-se transfer of investments held by Hexa Securities and Finance Co, which is a subsidiary of Hexa Tradex.

``Such SCN (show cause notices) was issued for transactions involving HTL, including transfer of investments held by Hexa Securities and Finance Company Limited (a subsidiary of HTL) to certain promoter group entities, for the purpose of realignment and reorganisation within the group,’’ the DRHP said. Many Jindal family members including Sajjan Jindal were also the directors of Hexa Securities.

The IPO approval process is expected to remain on hold till a settlement application, filed by Sajjan Jindal and other members of the Jindal family, is resolved by the regulator.

The draft prospectus said Sajjan Jindal and Prithvi Raj Jindal, a member of the JSW Cement promoter group, was charged of facilitating the transactions in Hexa Securities and Finance Company Limited.

The capital markets regulator said they had violated provisions of Sebi Act, 1992, and Sebi (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003.

The prospectus said Sajjan Jindal and other members of the JSW Cement promoter group submitted their replies on June 24, 2024 to Sebi.

They contested the show cause notices on merits and said that all the transactions were in due compliance with the applicable laws.

They had also filed settlement applications on May 16, 2024 to bring a closure to the matter, the red herring prospectus said.