Shareholder revolt at Actis-backed Halonix - report

They have also alleged to the Securities Exchange Board of India (SEBI) and Enforcement Directorate (ED) that public shareholders are being misled, according to the Times of India.

Portfolio management services firm Unifi Capital, which holds around 5% of Halonix, told SEBI chairman U K Sinha that disclosures made by the company manipulated public investors and eroded their wealth. Other shareholders, meanwhile, wrote to ED chief Rajan Katoch last month claiming that Halonix was writing off foreign exchange earnings to hide undisclosed liabilities in its European operations.

At the center of these allegations is Actis, which acquired Halonix from the Gupta family five years ago, and has seen the company's performance deteriorate since then.

The issue is that the company sought and received shareholder approval to sell off its loss-making compact fluorescent lamp (CFL) business to an affiliate of Actis, as well as getting approval for its automobile lighting business to acquire the operations of one of its largest European distributors. However, both the CFL restructuring plan and the European acquisition were abandoned months later, with no proper explanation given to shareholders.

The shareholders are now saying that the sale of the CFL business was an act of manipulation that led to losses for minority investors, while they believe the change of tack regarding the European distributor may have led to undisclosed liabilities, as the automobile lighting business has since reported a sharp drop in profits.

Actis continues to hold its 66% stake in Halonix, despite reports by Indian media that the firm was seeking a buyer for some or all of its shareholding back in 2010. A deal at the time was expected to fetch up to $56 million, with strategic buyer the most likely acquirer.

Actis took up its stake in Halonix, then called Phoenix Lamps, in 2007, through its Actis India Fund, buying promoter BK Gupta's 47% holding, then acquiring the rest through an open offer.

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• Topics
• South Asia
• Performance
• Industrials
• India
• Actis Capital
• Industrial Technology Investment