Manipal Health Faces Minority Shareholder Backlash Ahead of Crucial IPO Submission

Manipal Health Faces Minority Shareholder Backlash Ahead of Crucial IPO Submission​

A protracted dispute involving minority shareholders of its Kolkata-based subsidiary, Manipal Hospitals Synergie Private Limited (MHSPL), has surfaced ahead of Manipal Health Enterprises' IPO filing. The US-based investors have leveled multiple serious allegations against the company concerning promised returns, share dilution, and governance failures.

Manipal Health Enterprises (MHEL) has vehemently denied all claims, asserting that its Draft Red Herring Prospectus (DRHP) provides complete and accurate disclosures regarding the entire matter. The dispute involves five US investors who collectively hold 9,57,706 equity shares in MHSPL.

Core Allegations by Minority Shareholders​

The grievance centers on allegations dating back to the period between 2006 and 2009. The shareholders claim they invested around Rs 6.95 crore after founders assured them a fixed 15 percent annually compounded return. They allege that their shareholding was subsequently diluted, notably citing the issuance of approximately 50 lakh sweat equity shares at Re 0.01 apiece in 2007.

The minority shareholders contend they were excluded from critical corporate decisions and denied access to key information regarding MHSPL’s internal processes. They issued a demand notice in October 2025 seeking around Rs 32.25 crore towards the allegedly assured returns.

Governance Issues and Alleged Misconduct​

The investors also pointed out issues related to transparency surrounding an internal fraud investigation conducted by the subsidiary in FY23. The shareholders claimed that MHEL failed to provide them with the full investigation report despite repeated requests. They alleged that a departing founder of MHSPL might have received an exit payout amounting to nearly Rs 100 crore, which was mentioned in publicly available records.

Separately, the minority investors raised questions regarding their status, claiming their classification was incorrectly changed from non-resident Indian shareholders to resident shareholders without consent. They lodged complaints with the Directorate of Enforcement and the Reserve Bank of India (RBI) regarding alleged foreign exchange violations.

Manipal Health Rebuts Claims and Defends IPO Readiness​

MHEL has categorically rejected these accusations, stating that all material information pertaining to the dispute has been adequately disclosed in its DRHP, compliant with SEBI norms. The company stressed that no assured return can be legally guaranteed on an equity investment.

Regarding the investigation report, MHEL stated there is no legal requirement under the Companies Act, 2013 for MHSPL to share such a report with minority shareholders. It clarified that the relevant disclosure was already present in MHSPL’s FY23 Directors' Report.

Concerning the change in residency status, MHEL described it as an inadvertent clerical error made in the annual returns filed with the Registrar of Companies for FY24 and FY25. The company affirmed that filings with the RBI correctly reflected the investors’ actual status.

Executive Response Addresses Previous Management​

Sameer Agarwal, Group Chief Finance Officer at Manipal Hospitals, addressed the matter during a press meet last week in Mumbai. He stated that the concerns of the US minority shareholders pertain to the previous management of MHSPL when they invested.

Agarwal noted, "We have responded to them. It has nothing to do with Manipal." He added that the company had appropriately replied to SEBI regarding the matter and reiterated that it received no communication from the RBI indicating an ongoing investigation into these specific issues.