ABB Power Products and Systems India Ltd’s plan to buy back shares worth Rs 917 crore through an open offer has attracted the scrutiny of the markets regulator after complaints by a section of minority shareholders, said two people with direct knowledge of the matter.

The Securities and Exchange Board of India (Sebi) is examining whether the price offered to minority shareholders as well as the valuation is fair, and whether it needs to be revised, said one of the two people cited above. ‘Sebi is examining whether there is a need to appoint an independent valuer,’ the person said. There are, however, multiple issues that need to be considered. These include whether the promoters of ABB Power will earn better value for their holdings than minority investors, whether interest should be added to the offer price, and also whether the offer price has considered the low valuation at the time due to COVID-19 and, finally, the precedence of having an independent valuation in earlier instances as seen in the case of Federal-Mogul Goetze (India) Ltd last year.

‘Sebi is conducting its routine review as customary prior to granting clearance. ABB remains in close dialogue with the regulator on the matter,’ said ABB in an emailed response.

ABB Power, which was hived off from ABB India Ltd when the parent sold its power grid business to Japan’s Hitachi Ltd, debuted on exchanges in March through a demerger. In this deal, the merchant banker had considered the date of listing as 30 March and also considered the target company as infrequently traded.

The mandatory open offer was announced in June jointly by parent ABB Group and Hitachi for acquiring 25 per cent of the public shareholding of ABB Power at Rs 865.92 apiece.

The minority investors claimed in their complaint to Sebi that ABB was frequently traded at the time of the main transaction in 2018, and consequently, the resultant company must be treated as a frequently traded company and its valuation should have been done based on that price instead of March 2020.