India’s IPO market is seeing a record wave of share sales, but the role of investment banks and their links with investors is coming under greater attention. Mumbai-based Pantomath is one such case. The group has an investment bank, funds that invest in companies before they go public, a stake in a listed broking business and a mutual fund that began operations in July 2025.

Questions have been raised about deals in which funds linked to Pantomath invest in a company and the group’s investment bank later helps sell that company’s shares to public investors. In one case, a fund linked to the group bought shares in a placement handled by Pantomath itself. In three recent deals discussed in the report, investors who bought at the offer price have seen their holdings fall by 42% to 65%.

These facts do not by themselves establish that any rule was broken. However, they raise questions about how the interests of the bank, its funds and public investors are kept separate.

Hi-Tech Flow IPO Brings the Issue Into Focus

Hi-Tech Flow Solutions, a Delhi-based pipe maker, filed for an IPO last month with Pantomath among its two bankers. A fund linked to the Pantomath group holds 14.67% of the company. It bought the shares at ₹19.74 each and plans to sell all 20.3 million shares through the offer.

The Bansal family, which controls Hi-Tech Flow Solutions, has another listed company, Hi-Tech Pipes. In October 2024, Pantomath was the sole banker for a ₹500 crore share placement by Hi-Tech Pipes at ₹185.50 per share.

Pantomath has confirmed that one of its funds bought 2.7 million shares in that placement, worth around ₹50 crore. On September 21, the shares closed at ₹75, a fall of about 60% from the placement price.

The deal raises a basic question for investors: when a bank helps a company raise money and a fund linked to the same group buys shares in that deal, whose interests are being served? Is the purchase right for the fund’s investors, or does it also help the bank complete the transaction?

How the Group’s Businesses Work Together

Pantomath has managed 123 IPOs and was among the bankers involved in the National Stock Exchange’s public offering last month. Its founders, Mahavir Lunawat and Madhu Lunawat, have built a group that includes a merchant bank, pre-IPO investment funds, a 37% stake in a listed broking group and a mutual fund launched in July 2025. The mutual fund has around ₹2,000 crore in retail savings.

Other financial groups, including Kotak and Motilal Oswal, also have several businesses under the same group. The concern raised in Pantomath’s case is how often its different businesses appear on opposite sides of the same deal, especially in small companies where share trading can be limited and retail investors play a large role.

Indian rules recognise some of these links. Since a Pantomath-linked fund owns more than 10% of Hi-Tech Flow Solutions, Pantomath is treated as an associate of the company. In this situation, it can market the IPO but cannot manage the issue.

However, Pantomath is still required to sign the due-diligence certificate. This certificate confirms that the information in the prospectus has been checked and is sound. The rules require the bank to take responsibility for this certification, but they do not prevent a fund linked to the same group from selling its full stake through the IPO.

Marketing material for one of Pantomath’s funds, published by a fund distributor, describes an exit through an IPO or sale within about 3.5 years. It also refers to an average return of 2.5 times the investment and says the fund aims to buy shares at prices 30% to 40% below those of listed peers by using the group’s investment banking network.

This approach raises questions about how pre-IPO investments are valued, how long funds hold them and how public investors assess the shares they buy.

Vikran Engineering: From Early Investment to IPO

Vikran Engineering is another example cited in the report. In January 2024, a Pantomath-linked fund invested in the power contractor at a valuation of around ₹740 crore. Pantomath Capital was the exclusive banker for that deal, according to an announcement at the time.

Nineteen months later, Pantomath co-led Vikran Engineering’s IPO. The company was valued at ₹1,781 crore before the new money was raised, and retail investors paid ₹97 per share.

Two months after the listing, Vikran announced a solar power order worth ₹1,642 crore, and its share price rose. By February, the order had been cancelled and the company’s internal auditors had resigned.

Between September 2025 and June 2026, domestic institutional investors reduced their holding in Vikran from 12.6% to 5.7%. The public’s share rose from 28.8% to 36.7%, while the number of shareholders increased by around 17,000.

Shareholding data suggest that the Pantomath-linked fund reduced its holding by about 6%. Pantomath says it sold less than 5% of its initial investment.

The sequence raises questions about the movement of shares from early investors to the public and the information available to investors after listing. It does not, on its own, establish that the transactions were improper.

SAR Televenture and the Sharp Fall in Its Share Price

SAR Televenture, a company that works in telecom towers, followed another path. Pantomath brought the company to the stock market in 2023 through an IPO that raised less than ₹25 crore.

Eight months later, the company raised another ₹450 crore. This included ₹150 crore through a follow-on offer at ₹210 per share and ₹300 crore through a rights issue at ₹200 per share.

The market maker for the shares was the broking arm of Asit C Mehta, which is partly owned by a Pantomath company. SAR Televenture’s shares reached ₹414 about six weeks later but have since fallen to around ₹73.

Pantomath says its fund continues to hold its full stake in SAR Televenture.

What Do the IPO Numbers Show?

According to IPO Platform, a data firm, nine out of every ten of Pantomath’s 123 IPOs listed above their offer price. However, more than half of those stocks now trade below the price at which they were offered to investors.

Of Pantomath’s last eight main-board listings, five are trading below their offer prices.

Small-company IPOs carry risks, and the figures alone do not show how Pantomath compares with other investment banks. The report does not provide a full comparison with its competitors. Still, the performance of several of these stocks raises concerns about the returns received by investors who bought shares at the IPO price.

Earlier SEBI Findings Involving a Related Broker

The report also looks at the history of Pantomath Stock Brokers, a brokerage firm whose board included the Lunawats and which made markets in 63 small-company IPOs between 2016 and 2020. Pantomath Capital handled all 63 IPOs.

In 2022, SEBI found that the broker had used up to ₹24 crore of client money improperly on 35 of the 37 days checked during its inspection. SEBI described the violations as “very serious”.

The regulator found that the broker had pledged client shares beyond the amount they owed and used client funds to cover its own trading losses. The broker said it was holding ₹32 crore of stock for market-making in small and medium enterprise IPOs.

SEBI imposed a fine of ₹20 lakh. It held the Toshniwal family, which ran the brokerage’s daily operations, responsible rather than the Lunawats. The Lunawats said they had separated themselves from the broker by 2019.

However, Pantomath continued to use the broker as a market maker for two more IPOs in 2021 and 2022. In 2022, a new company linked to the Lunawats bought a stake in Asit C Mehta, the brokerage that later acted as market maker for SAR Televenture.

Pantomath Stock Brokers gave up its exchange licence in July 2025, one week after SEBI licensed the group’s mutual fund. Pantomath described the timing as a coincidence.

A separate SEBI inspection of Pantomath Capital in 2023 found that the signatures on two due-diligence certificates did not match each other or the signatory’s identity card. The charge was dropped in 2024 without a ruling on the signatures.

Questions About the Group’s Mutual Fund

Pantomath’s mutual fund is sponsored by Pantomath Capital, run by Madhu Lunawat and overseen by a trustee company called Pantomath Trustee. All three operate from the group’s head office in Andheri, Mumbai.

Pantomath told the report that the mutual fund is allowed to invest in any IPO, including IPOs managed by Pantomath. However, a review of seven of its schemes did not find any shares linked to Pantomath in their holdings. The rules do not prevent the mutual fund from investing in such IPOs.

Pantomath’s Response

Pantomath responded to questions in writing and answered follow-up questions on October 8. It said each business is a separate company registered with SEBI and has its own board. It also noted that financial groups with several connected businesses are common in markets such as New York and London.

The group said a fund’s ownership of shares in a company that its investment bank takes public does not, by itself, mean there is a conflict of interest under the rules. It said all holdings were within the allowed limits and had been disclosed. It also said SEBI requires bankers to sign due-diligence certificates regardless of their role in the issue.

Some of the responses raise further questions. Pantomath first described its Bharat Value Fund as a long-only fund that holds investments for the longer term. When asked about sales material promising an exit within around 3.5 years, it explained that long-only means buying and holding shares without trading or short selling.

On the earlier broker case, Pantomath said the Lunawats had taken the matter to the authorities, including SEBI. However, SEBI’s findings came from its own inspection, and the regulator rejected the claim that responsibility lay with earlier management as “baseless”.

Pantomath did not identify the other IPOs in which funds linked to the group had invested. When asked about its earnings from the Hi-Tech Flow offer, it referred to the offer documents. Asked whether its mutual fund had invested in any IPO managed by Pantomath, it said only that it was allowed to do so.

Do the Rules Need to Be Reviewed?

The report compares India's rules with those in the United States. In the US, when a bank’s related businesses own 10% or more of a company issuing shares, the conflict must be clearly disclosed. An independent underwriter is often required to check and support the price.

In December, SEBI barred bankers from leading IPOs where their own directors or employees held even 0.1% of the company. But a fund linked to the same group can hold 14.67% of a company and sell its entire stake through an IPO, as in the Hi-Tech Flow case described in the report.

Pantomath may not have broken any rules. The central question is whether the existing rules provide enough protection when different businesses within the same group take different roles in a share sale.

When a fund linked to an investment bank sells its shares through an IPO managed or marketed by that bank, investors need to understand who is selling the shares and what links exist between the parties. Clear disclosures, independent checks and better information could help investors make more informed decisions.